Store Credit Card Rates Top 30 Percent Ahead of CFPB Late-Fee Rule

Users of store-branded credit cards might have noticed higher interest rates and the introduction of new fees over the past year ahead of a new rule lowering and capping late fees.
Store credit cards are a version of retail cards companies use to enhance brand loyalty by offering shoppers discounts on merchandise. While customers receive various perks and savings, they also face sky-high interest charges. Rates attached to these store cards have registered an upward trend this year.
Other financial resources have observed higher interest rates. WalletHub, for example, found the latest average for store cards is slightly above 33 percent.
Still, says Ted Rossman, a senior industry analyst at Bankrate, customers may need to be cautious before retailers offer these cards.
“The retailer may dangle 10 percent off today’s purchase if you sign up, but that’s not worth it if you’re going to pay a 30 percent interest rate for years to come,” Rossman said in the group’s report studying store card rates.
“Thirty percent used to represent an unofficial ceiling for retail credit card rates, but now most retail cards have crossed that threshold.”
The sizable rate uptick could be in response to a new federal regulatory measure limiting late fees.
Bread Financial is one company that has responded to the imminent regulation. Bread, which has partnered with many well-known brands such as Michaels, the New York Yankees, and Victoria’s Secret, blamed the “flawed CFPB late-fee rule” for its business model changes.
With President-elect Donald Trump and many within his incoming administration championing a deregulatory approach to governing, there has been speculation that the Trump administration could reverse some of these rules.
Industrialist Elon Musk, who will head the Department of Government Efficiency (DOGE) alongside former presidential candidate Vivek Ramaswamy, wants to eliminate the financial watchdog.
Synchrony Financial, which offers various branded cards from Amazon, American Eagle, Lowes, and Verizon, is still planning for the late-fee rule introduction in 2025.
The CFPB’s measure has faced a couple of legal hurdles pertaining to the industry change.
Whether the rule will go into effect or not remains to be seen.
“As a result of ongoing litigation, the Credit Card Penalty Fees Final Rule published in the Federal Register on March 15, 2024, is stayed,” the CFPB said.
Rob Nichols, president and CEO of the American Bankers Association, says the initiative would reduce competition, raise the cost of credit, and decrease credit access for the most vulnerable.
Trump has indicated he is willing to rein in credit card companies’ business practices.
“We’re going to cap it at around 10 percent. We can’t let them make 25 and 30 percent,” he told a Long Island audience.
This has ostensibly captured bipartisan support.
“With limited options to absorb those higher costs, many low-income Americans have had no choice but to take on debt to afford costlier essentials—at a time when credit card rates are near record highs,” said Sarah Foster, a Bankrate analyst.