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If you're a regular shopper, you've probably been offered at least a few retail credit cards. They can sound enticing but often come with a catch, like a high interest rate. In fact, the average store card now charges an APR of 30.14%, according to Bankrate's latest retail credit card survey — up from 26.72% in 2022 and 28.93% in 2023, and only slightly lower than 2024. That's substantially higher than the average interest rate on general-purpose credit cards (21.39%).
According to Bankrate senior industry analyst Ted Rossman, the line in the sand for retail cards has traditionally been a 30% APR. "In fact, 29.99% was an artificial barrier that few dared to cross — for psychological reasons, mostly," Rossman said in a statement. "But the market has blown past that threshold given the Fed's aggressive series of interest rate hikes over the past year and a half."
CNBC Select takes a look at some of the downsides to retail credit cards and a few alternatives to help you avoid soaring interest rates and earn rewards for your spending.
Why you should often avoid retail credit cards
Retail credit cards can look like a great deal at first, offering large discounts on your first purchase or 0% interest for a limited time. But if you miss a payment, you're often required to pay retroactive interest on your initial balance, which can make them extraordinarily costly.
Store cards are especially popular around peak shopping periods, like holidays. But it's important to not spend more than you can afford or you could be stuck with a card with an APR over 30% and no useful features. Carrying a balance on a card with such a high APR can be incredibly expensive
Additionally, the rewards programs of retail credit cards are often lackluster — awards for spending are usually much less valuable and less flexible in the way you can redeem them compared to a card that earns cash back or flexible rewards points.
If you're offered a retail credit card, take the application home and do some research online first. Don't accept something just for a quick discount — in the long run, it could cost you a lot more.
Alternatives to retail credit cards
Tempted by a store card's introductory offer? You might want to investigate traditional credit cards that have a 0% APR intro period, earn you cash back or have travel benefits.
The Chase Freedom Unlimited® card is a great option for earning cash back and doesn't charge an annual fee (see rates and fees). With the card new cardholders earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening. You'll earn 5% cash back on travel purchased through Chase Travel℠, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% cash back on all other purchases. Plus, cardholders will also enjoy a 0% intro APR for the first 15 months, even the variable APR of 18.24% - 27.74% is lower than what many retail credit cards charge.
The Chase Freedom Unlimited® is a no-annual-fee card that earns generous cash-back on everyday purchases and a lucrative welcome bonus. Plus, if you pair it with a premium Chase credit card that allows point transfers, you can convert your cash back into flexible travel rewards.
- Users get a high rewards rate and strong welcome bonus
- Purchases and balance transfers receive an intro APR
- No annual fee
- Has a foreign transaction fee
- Few rewarding ongoing benefits
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Enjoy 5% cash back on travel purchased through Chase TravelSM, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases.
- No minimum to redeem for cash back. You can use points to redeem for cash through an account statement credit or an electronic deposit into an eligible Chase account located in the United States!
- Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.24% - 27.74%.
- No annual fee – You won't have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
- Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
- Member FDIC
Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, in the first 60 days. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
Foreign transaction fee
3% of each transaction in U.S. dollars
If you purely want to focus on getting the lowest interest rate possible, the Wells Fargo Reflect® Card offers a 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers (17.49%, 23.99%, or 28.24% variable APR afterward). Balance transfers made within 120 days qualify for the intro rate, BT fee of 5%, min: $5.
The Wells Fargo Reflect® Card is one of the absolute best cards you can apply for if you want to save on interest and pay down debit quickly thanks to its extra generous intro-APR offer on purchases and qualifying balance transfers.
- Incredible intro-APR for purchases and qualifying balance transfers
- No annual fee
- Cell phone insurance: up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible
- No rewards
- No welcome bonus
- High balance transfer fee
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Apply Now to take advantage of this offer and learn more about product features, terms and conditions.
- 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers. 17.49%, 23.99%, or 28.24% variable APR thereafter; balance transfers made within 120 days qualify for the intro rate, BT fee of 5%, min: $5.
- $0 annual fee.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
- Through My Wells Fargo Deals, you can get access to personalized deals from a variety of merchants. It's an easy way to earn cash back as an account credit when you shop, dine, or enjoy an experience simply by using an eligible Wells Fargo credit card.
Balance transfer fee
5%, min: $5
Foreign transaction fee
3%
For those who prefer to rack up flexible benefits while shopping or dining out, the American Express® Gold Card is a great option. With the Pay Over Time* option you can carry a balance on eligible charges up to the Pay Over Time Limit. Balance subject to a 19.49% to 28.49% variable APR (see rates and fees). You can earn 4X points at restaurants worldwide (on up to $50,000 in purchases per calendar year, then 1X) and U.S. supermarket purchases (on up to $25,000 in purchases per calendar year, then 1X).
Travel perks include 3X Membership Rewards points on flights booked on AmexTravel.com, the Amex Travel App or directly with an airline, plus up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction. That's up to $120 Uber Cash annually. An Amex Card must be selected as the payment method for your Uber or Uber Eats transaction to redeem the Amex Uber Cash benefit. You must have downloaded the latest version of the Uber App and your eligible American Express Gold Card must be a method of payment in your Uber account. The Amex Benefit may only be used in the United States), up to $120 in dining credits (up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. Enrollment required.) and no foreign transaction fees when you travel abroad (see rates and fees).
*All charges not added to a Pay Over Time balance or monthly payment plan or Cash Advance balance must be paid in full each month by the payment due date
The American Express Gold Card is great for earning valuable Membership Rewards® points at restaurants worldwide and U.S. supermarkets. Membership Rewards® points transfer to many of the top airline and hotel loyalty programs, which makes this card one of the best options for earning travel rewards.
- You can earn $400+ in dining and rideshare credits every year (Enrollment required for select benefits mentioned)
- Exceptionally rewarding for eligible restaurant and U.S. supermarket purchases
- No foreign transaction fees
- Large annual fee
- Credits are more complicated, you earn them monthly or semi-annually
- Spending caps on the top bonus categories
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you're approved and find out your exact welcome offer amount – all with no credit score impact. If you're approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App.
- Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines.
- Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You'll know upfront exactly how much you'll pay.
- Updated! $120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. This can be an annual savings of up to $120. Enrollment required.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That's up to $50 in statement credits semi-annually. Enrollment required.
- $84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment required.
- $120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
- New! As an American Express® Gold Card Member, you can enjoy complimentary Hertz Five Star® Status. Enjoy benefits like skipping the counter at select locations, adding an additional driver at no additional cost*, and vehicle upgrades**. Benefit enrollment and Hertz Gold+ registration are required. *Additional drivers must meet standard rental qualifications and must be a spouse or domestic partner to qualify as complimentary. Other additional drivers subject to fees. **Benefits are subject to availability and vary by location. Additional Hertz program Terms and Conditions including age restrictions apply.
- Take advantage of a $100 credit towards eligible charges* at over 1,300 upscale hotels worldwide when you book The Hotel Collection through AmexTravel.com or the Amex Travel App **. *Eligible charges vary by property. **The Hotel Collection requires a two-night minimum stay.
- Book your travel through the Amex Travel App with added peace of mind – backed by American Express® service and support. Only for American Express® Card Members.
- Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
- See Rates & Fees
Foreign transaction fee
None
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Bottom line
The average interest rate on retail credit cards has hit an all-time high, yet another reason to think twice about getting one. Whether you want cash back, travel perks or a long 0%-intro-APR period, chances are there's a traditional credit card that's a better fit for your needs.
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For rates and fees of the American Express® Gold Card, click here.
