Photo (cc) by Ian Muttoo
Congress has a bad reputation, mostly self-inflicted, but it’s still nice when a congressman backs up what I’ve been saying for a while.
Last week, Rep. Anthony Weiner (D- Queens & Brooklyn) released a study warning shoppers of the sky-high interest rates on retail store credit cards – which can have interest rates as high as 28.99 percent, nearly double that of a regular credit card.
“Retailers promise big savings, but they’re doling out big bills on customers,” Weiner said. “When it comes to store credit cards, shoppers should leave home without them.”
Of course, I ran through the pros and cons of store credit cards just a couple months ago (Should I Apply for a Credit Card to Get a Store Discount?). And there are pros – even Consumer Reports agrees with that. “We’ve found some store cards that carry actual reward,” the magazine reported last week. “For example, Costco’s card charges 0 percent interest for six months and 15.24 percent interest thereafter.”
But Weiner’s survey of store cards in New York City is still revealing. His staff rated the “Top 5 Worst Retail Store Cards.” They were …
Radio Shack: 28.99 percent
Best Buy: 27.99 percent
Staples: 27.99 percent
Home Depot: 25.99 percent
Sears: 25.24 percent
How outrageous are those interest rates? All you gotta do is check out our Credit Card Comparison page, where you’ll see rates as low 7.25 percent.
“Consumers need to be aware that store cards usually carry sharply higher interest rates than ordinary credit cards,” Weiner said. “Don’t succumb to high-pressure holiday pitches to open up a new store account without carefully checking the interest rate, penalty and late fees, and other fine print.”
Of course, being a congressman, Weiner isn’t just talking. He wants to legislate. He’s introduced a bill to “increase point of purchase disclosure of interest rates, grace periods, and annual fees for store credit cards.” It probably doesn’t stand a chance in the new Republican-dominated House of Representatives, so until then, it’s borrower beware.