Dozens of retailers, including Macy's, Gap and TJ Maxx, increased APRs on their store credit cards before the Federal Reserve cut rates, padding their profits.
At least 50 of the largest U.S. retailers boosted interest rates on their store credit cards in the months before the Federal Reserve began cutting rates, in moves that protected their profit margins.
However, it's not just monetary policy pushing APRs higher. Just before the Fed began its rate-cutting cycle in September, many retailers and their bank partners raised interest rates on their store cards to protect their profits when the federal funds rate — which determines their own interest rates — came down."If you get offered one of these this holiday season, really take a breath. I would just say no if you're going to carry a balance," said Rossman.
"It goes to show you know how their greed is affecting them," Matheney said of the record high rates. "They reel you in, and they say you can save 40% off by getting this card, and then what happens when you do end up carrying a balance? Well, you've just paid that 40% back and then some."Most credit cards are indexed to the prime rate, which shifts based on the Federal Reserve's rate.
When asked why they increased the APR on their store cards, the companies that returned CNBC's request for comment pointed vaguely to industry standards and the current economic environment.
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