Money Matters - Credit Card Reports from WalletHub

With the average shopper expected to spend roughly $902 this holiday season, store credit cards charging interest at a record-high rate of 33.07%, and 61% of people unaware of how “deferred interest” works, WalletHub recently released its 2024 Deferred Interest Study and its annual Store Credit Card Landscape Report to help people get the most out of retailer financing offers.

Here are some highlights from WalletHub’s research:

• Too Many Tricks: 88% of Americans think retailers have too many financing tricks.
   
• Major Retailers Still Offer Deferred Interest: Amazon, Best Buy and Home Depot, among others.
   
• Widespread Problem: 85% of store credit cards with 0% intro APRs use deferred interest.
   
• Calls to Ban Deferred Interest: Nearly 2 in 5 Americans say it should be illegal for retailers to use deferred interest.
   
• Retailer Reputation Damage: 86% of people say they have a negative opinion about stores that use deferred interest.
   
• Consumer Confusion: 61% of people don’t understand how deferred interest works.
   
• Interest Rate Roulette: 51% of Americans have agreed to a special financing offer without being sure they can handle the monthly payments.
   
• First-Purchase Discount: The average store card with an initial discount for new cardholders gives 21.19% off.
   
• Average 0% Intro Period: The average store credit card with a 0% intro APR is interest-fee for 17 months.

 
“Holiday shoppers have enough to worry about without adding the potential for surprise interest charges to the list. But that’s exactly what people will get if they opt for promotional financing from retailers. Our research shows that 85% of store credit cards with a 0% APR offer use something called deferred interest. That means a very high interest rate could apply retroactively to your original purchase amount, like the 0% offer never was there, if you don’t pay off your full balance by the end of the promotional period. You could go from a 0% APR to a 30% APR overnight if you’re not careful. Fortunately, general-purpose 0% credit cards not affiliated with specific retailers don’t have this feature.”

 - John Kiernan, WalletHub Editor
 

 
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