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The question — “Would you like to sign up for a store card?” — is a customary, sometimes irritating, part of the store checkout process. While store cards can be great ways to access discounts and other benefits, they can also be among the most expensive credit cards out there with rates often surpassing 20% APR. Who signs up for and uses retail cards the most?
After combing through TransUnion credit data from users of My LendingTree, the free credit monitoring service of the parent company of CompareCards, we found that some metro areas are home to heavy users of retail cards while other locations have a population who use retail cards more sparingly. Our study uncovers retail and charge card usage for 100 of the most populated metropolitan areas. Nationally, 61.3% of credit card owners have at least one retail card and 30.4% of them carry a balance on a retail card, representing 11.4% of outstanding balances. The average balance on a retail card in the U.S. is $2,699.
We looked at a sample of anonymized users who logged into My LendingTree the first quarter of 2018. From this sample, we calculated how many of them had retail credit and charge cards, and then calculated statistics related to their balances.
Four statistics were the areas of focus:
- Percentage of credit card owners who have at least one retail card.
- Average balance on retail cards, among those who have them.
- Percentage who carry a balance on retail cards.
- Average percentage of credit card and charge card balances that are held on retail cards.
The results were aggregated to the 100 largest metropolitan statistical areas by population. To rank results, each metro was scored by summing the normalized value (relative to other metros) of each of the four statistics and then dividing that sum by four, for a highest possible score of 100 and a lowest possible score of 0.
In this study, retail cards are defined as revolving credit cards or charge accounts under the following industry codes: Clothing; Home Furnishings; Department & Variety Stores; Automotive; Oil Companies; Jewelry & Cameras; Lumber/Building Material/Hardware; and Sporting Goods. Farm & Garden Supplies are not included since these appeared to include mostly heavy agricultural equipment suppliers.
- Residents of McAllen, Texas are by far the highest users of retail credit and charge cards. The metro earned a final score of 87.2 and ranked first in these categories:
- The number of people who have retail cards (72%)
- The number of retail card owners who carry a balance on their retail cards (45%)
- And the percentage of credit card debt carried on a retail card (17%)
- People in Charleston, S.C. have this retail card claim to fame: They carry the highest balances on their retail cards among all 100 metros, with an average balance of $4,026 and a median balance of $1,746. Meanwhile, Albany, N.Y. had the lowest average balance ($2,420).
- Honolulu has the lowest retail card usage, with a final score of 9.4; although it didn’t rank last in any individual category, it ranked extremely low in all.
Where people use the most retail cards
McAllen, Texas is the clear leader for retail card usage with a score of 87.2. A whopping 72.4% have retail credit cards, and 45.1% carry a balance on their card. The average retail card balance is $3,207. Credit card users also have 17% of their total credit card debt sitting on retail credit cards, the highest percentage in the study.
Charleston, S.C. lands a score of 68.8 with 63.4% having retail credit cards. Although this location came second on our list, Charleston has the highest average balance on retail cards ($4,026), and 32.9% who have a retail card carry a balance. Retail balances make up 13.1% of their total credit card debt.
Bakersfield, Calif. rounds out the top three locations that use the most retail cards with a score of 66.1, and an average retail card balance of $3,053. A sizeable 68.1% of people have retail cards; 37.3% keep a balance on their cards; and retail card balances make up 14.5% of their total credit card debt.
In Riverside, Calif., 66.4% have retail cards with 36.5% carrying a balance. The average retail credit card debt is $3,115, and 13.7% of people’s total credit card debt is sitting on retail cards. The area’s final score is 62.5.
Lakeland-Winter Haven, Fla. earns a score of 60.9 to take 5th place. This location has the second highest average balance on retail cards ($3,628). However, only 60.8% use retail cards, and 34% carry a balance. On average, retail card balances make up 12.9% of their total credit card debt.
The Greenville, S.C. area gets a score of 59.7 with 60.3% of people having retail cards. Data shows 34.8% of cardholders carry a balance and the average balance is $3,244; 14.6% of their total credit card debt is carried on retail cards.
Syracuse, N.Y. gets a final score of 59.5, and has an average retail card balance of $3,424. Just 11.5% of their total credit card debt is carried on retail cards despite 66% the population having retail cards, and 34.9% carrying a balance.
Spokane, Wash. has the lowest average retail credit balance ($2,863) of the top 11 metro areas. Overall, 63.5% have retail cards, and 35% carry a balance. On average, 15.1% of their total credit card debt is carried on retail credit cards. The location has a 58.5 final score.
In Cleveland, Ohio, 62.6% of people have retail cards with an average balance of $3,066; 34.9% carry a balance on their retail cards; 13.8% of their total credit card debt is held on retail credit cards. Cleveland scores 57.1.
El Paso, Texas has a final score of 56.9. Data shows 65.3% of people in the area have retail credit cards, and 39.2% of cardholders carry a balance. The average retail balance is $2,896. The percentage of their total credit card debt held on retail cards is 12.3%.
Houston, Texas ties with El Paso for the 10th spot, having also scored 56.9. This area has a lower percentage of people who have retail cards than El Paso (62.6%), but a higher average retail credit card balance ($3,381).
Retail credit card tips
Retail card offers can feel difficult to pass up. Stores tend to sweeten the offer by giving you a sign on special like deferred interest or an immediate store discount. You can also apply within minutes at the register, and pristine credit may not be necessary. What more could you ask for? Turns out there are some stumbling blocks to watch out for when using store cards.
Deferred interest can be a free loan, but it can also get you into big trouble if you don’t pay off the balance within the grace period. A card with deferred interest is one that lets you carry a balance without interest for a certain amount of time. But when the deferred interest deal expires, you get hit with the interest incurred since the date of your initial purchase. Not good.
Be careful of slipping and falling face first right into a debt trap. This can happen quickly if you make a habit of purchasing more than you can pay off monthly on a retail card. Exclusive store “deals,” coupons and other thinly veiled marketing tactics touted as specials are meant to encourage more spending. Discounts or rewards can be enticing, but making a purchase that’s on sale, revolving a balance and then incurring interest can make the initial benefit you get from these store perks almost negligible. The average credit card APR is 15% while the average store card APR is over 20%. Combine high interest with a soaring balance and you could get into some trouble.
Users of retail cards sometimes have remarkably high credit limits and balances. A high balance in excess of $100,000 is a more frequent occurrence with retail cards. With a high balance such as this, high monthly interest charges can become an expensive thorn in your side. For example, if you have an APR of 20% and an outstanding balance of $100,000, the interest accrued on a monthly basis could exceed $1,600. That’s a down payment on a car, or a monthly mortgage payment.
Here are a few tips to make the most of retail cards without accumulating an unmanageable mountain of debt:
Avoid a carrying a balance. Having a retail card shouldn’t cause you too much trouble if you prioritize paying your balance off in full each month. Take advantage of store perks without falling victim to mounting interest.
Use plastic only when necessary. It can be tempting to make purchases because an annual sale, rewards offer or discount coupon is announced. Think twice before shopping above and beyond what you actually need from a certain store even if there’s a deal.
Choose your retail cards wisely. Applying for a card seems harmless enough at the store counter, but each of these applications can trigger a hard inquiry. Hard inquiries can dock your credit score several points, and may signal to lenders that you’re having some financial trouble. If you’re shopping for a mortgage or auto loan, hold off on applying for any and every retail card.
Get your hands on a balance transfer card. You have options if you’re stuck with a high interest rate and are struggling to repay your retail card debt. Think about transferring your balance from a retail card to another card that has an introductory offer. Some balance transfer cards offer a low-interest (or no-interest) introductory period for six months to a year or even more. Applying for a balance transfer card will likely trigger a hard inquiry, but the temporary loss in points may be worth the 0% interest. You can use the introductory period to put a significant dent in your principal.