Credit Cards Blog

Finance Blogs » Credit Cards » Subprime fuels store card growth

Subprime fuels store card growth

By Janna Herron · Bankrate.com
Tuesday, November 26, 2013
Posted: 4 pm ET

The growth of store credit cards is outpacing that of regular, bank-issued credit cards partly on the backs of consumers with spotty credit, according to a new report from Equifax.

The credit reporting bureau said Monday that new accounts and new limits for store credit cards and bank-issued credit cards increased between January and August of this year versus 2012. But the performance by store credit cards was much more impressive.

The number of new store credit cards rose by 8.8 percent compared with last year, while new limits increased 11.6 percent. By comparison, the number of new bank-issued credit cards grew 7.3 percent, and their limits increased by 9.1 percent during the same time.

The total number of open store credit cards hit 183 million accounts, the highest since September 2009. Bank credit cards totaled 312 million accounts, the most since December 2009.

"It makes perfect sense for the volume of retail store cards to continue to rise (faster)," says John Ulzheimer, credit expert at Credit Sesame. "They're a much more reasonable option for consumers who have imperfect credit because they're so much easier to get than a general-use credit card."

The number of new store credit cards issued to consumers with subprime credit from January to August increased 15.8 percent to 8.2 million accounts compared with last year. The number of bank-issued credit cards granted to subprime consumers rose only 3.6 percent to 8.1 million accounts during the same time. Subprime is defined as a credit score below 660.

While store credit cards are easier to qualify for, they generally come with worse terms, says Ulzheimer. Their credit limits typically don't exceed $1,000 when the card is opened, and their annual percentage rates usually range between 23 percent and 30 percent. The average rate for variable credit cards is 15.31 percent, according to Bankrate's weekly survey of interest rates.

Have you opened a store credit card recently? If so, why?

Follow me on Twitter: @JannaHerron.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
3 Comments
pedrorqk624
December 01, 2013 at 8:39 am

if you need a job try this site JOBS61 (dot)COM. Dan does it at home and makes $19.96 hourly just sitting and typing stuff all day...No experience needed too