Some consumers in Ohio have accumulated mountains of debts on store credit cards, and with the holiday shopping season coming up, there will once again be many tempting offers. Signing up for these credit cards typically includes irresistible rewards, and the marketers advertise the benefits in bright lights but never mention the negative aspects of the offers. Many a bankruptcy filing has followed overwhelming store card debt.
The banking industry says approximately 50 percent of credit card users pay their balances in full every month. The other half carries balances over from month to month. Some of these consumers may unintentionally land in a debt spiral. The interest rates on store cards are exceptionally high, with an average of approximately 24 percent — compared to an average of around 15 per cent charged on other credit cards.
A survey indicated that credit card interest rates ranged between 10.24 percent and 30 percent. However, even the lowest rate proved to be subject to fluctuation. By reading the small print, one can learn that a 15 percent rate initial offer can jump to 27 percent after one missed or late payment. A Macy’s store cardholder reported the store applied 14.4 percent interest to certain purchases and 22.9 percent to others. Moreover, Macy’s applied most of the money she paid to recent purchases, leaving older balances unpaid and subject to even higher interest rates.
For these reasons, it is imperative that consumers carefully read the small print on store credit card contracts. While benefits may be significant for some, the cards may not be suitable for consumers who carry balances from month to month. Ohio residents facing credit card debt that has become unmanageable may find comfort in learning that experienced attorneys can use bankruptcy laws to lower payments or discharge the debt entirely.
Source: click2houston.com, “Store credit cards, are they really worth it?“, Amy Davis, Nov. 10, 2016