The Finance Blogger

The highest credit card interest rate is around 28% or 29%, depending on which department store you have a credit card with. These department stores often advertise no interest or low interest for some defined period. They often do this when you purchase furniture. Once this time frame is over, the full interest rate is applied to any unpaid balance on the credit card. This is a very high-interest rate when you compare it to personal mortgages that are below 5% at the time of writing this post. Personal loans carry a higher interest rate which depends on the credit rating of the applicant and whether the loan is secured or not.

Most bank credit cards range from 10% to 18% depending on the type of card, whether there is an annual fee or not, and whether there are other benefits that are included with the credit card. Most store-based credit cards do not offer additional benefits unless it is precise with the store. They focus initially on making the sale for the item you are buying and then focus on providing you with a credit card to charge it to with free interest for a while for the first purchase.

Convenient Highest Credit Card Interest Rate

Store credit is very convenient, especially when purchasing large items such as furniture or appliances. Consumers may not have sufficient credit limits on their current credit cards, and when the store offers them a credit account with a credit card to purchase the appliances, etc., most consumers will jump at the chance.

They may not realize this, and they probably will not have it explained to them at the time about the high-interest rates. The store management already knows that a certain percentage of customers will not pay the balance in full at the end of the month. They know they can start charging these high-interest rates and make even more money off this unsuspecting consumer.

High-Interest Rates

Rates that are this high, upwards of 28%, have a huge interest component each month. When you get your bill, a minimum payment is always specified. This payment will consist of the interest you owe for the month plus a small principal amount. A small amount of principal is paid each month. It will be years before your credit card is paid in full. Consumers will have paid the store credit card company thousands of dollars in interest.

This is actually what they are counting on so they can make more money off of each consumer. In fact, they will make more profit off the interest charged to consumers than they do for the products they are selling in some cases. They are counting on you not to pay the balance when it is due. They want you to start paying interest on that unpaid balance. As we mentioned, they would prefer their customers to do this so they make more money on the interest.

Pay Your High-Interest Credit Card Balance in Full Each Month

Even if you have to take out a personal loan, increase your mortgage or find the money somewhere, consumers would be further ahead in borrowing the money to pay these credit cards in full at the end of the month. They will still pay interest. However, paying 10%, compared to 28%, is almost a third of the cost. This represents a substantial savings for the consumer. These savings can be applied to the loan enabling consumers to repay the loan much faster.

Consider a personal loan, a secured loan, or a mortgage consolidation loan to repay your high-interest credit cards. You will save thousands of dollars. Even if you have to pay appraisal fees or other expenses within reason, of course, you will be further ahead.  Ask your financial loan manager to help with the calculation of the savings. Determine just how much you will save by taking this approach. You will be amazed at the savings that are possible. You will have more money available to repay the debt that you owe as well.

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