Retail credit card interest rates remain stubbornly high, despite the Federal Reserve’s rate cuts at the end of 2024. While standard credit card rates have held steady and mortgage rates have inched lower in recent weeks, retail card rates have shown little movement.
According to the 2025 Bankrate Retail Cards study, the average retail card APR now stands at 30.14%—”nearly 1.5 times higher than the average interest rate for all credit cards,” which is currently 20.12%. Within the retail category, store-only cards carry the steepest rates at 31.64%, while co-branded cards are somewhat lower at 28.65%.
“Retail cards have historically been aimed at prime and below customers and thus tend to have higher fees to offset the risk,” said Ben Danner, Senior Analyst of Credit and Commercial at Javelin Strategy & Research. “With merchants that have a private label and a co-branded card, the higher credit score customers will be placed into the co-brand card, while lower scores will be placed into the private label.”
Reaching Their Limit
The retail credit card market has been in decline in recent years. According to Equifax, store-only originations peaked in 2015 at 44.3 million but fell to 16.8 million private-label credit cards last year.
While many retailers have slightly lowered their rates following interest rate cuts by the Fed, some have actually raised them, per Bankrate. Saks Fifth Avenue’s flagship credit card, for example, has increased from 29.24% to 35.99% over the past year, coinciding with a switch in issuer from Capital One to Comenity. Victoria’s Secret also offers cards at 35.99%, while the Gap’s cards carry a 33.99% rate.
These numbers may be approaching their limits. The Military Lending Act imposes a 36% APR cap for active service members, which has effectively become “a de facto ceiling for all” credit cards.
Other Rates Are Dropping
The average credit card interest rate has remained largely unchanged in recent months, although it’s slightly down from a record high of 20.79% set last August. Other rates have been falling recently, particularly 30-year fixed-rate mortgage rates, which peaked above 7% in January but have now eased to 6.35%.
“As interest rates are tied to the prime rate, the rates will drop as the prime rate decreases,” said Danner. “However, we expect retail credit card to still have relatively high rates in comparison to other credit card products.”
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