Retail Card Issuers Loosening Credit Standards
The issuers of retail credit cards seem to be significantly easing their credit standards, according to data from Equifax’s August National Consumer Credit Trends Report.
The number of open retail credit card accounts reached a 31-month high in July, exceeding 175 million for the first time since December of 2009.
These new retail accounts are coming with higher credit limits, making it easier for new consumers to charge more. Credit limits on these new accounts totaled $25.1 billion for the January through May period, an increase of more than 16 percent from the same period last year.
With more accounts and higher credit limits, it should come as no surprise that the balances carried on retail credit cards has increased. Balances on these cards reached $51.5 billion in July, an increase of 5 percent over year ago levels.
Consumers need to exercise caution on retail credit cards since these cards carry interest rates that are typically between 23 and 30 percent, significantly higher than bank-issued credit cards. Carrying a balance on these cards can be very costly.
According to the LowCards.com Weekly Credit Card Rate Report, the average advertised APR last week among the nation’s 1000+ credit cards was 14.36 percent.