Less Than 30% of Consumers Will Apply for a Store Credit Card This Holiday Season, the Lowest Number in 3 Years

Rhea-AI Summary

According to a recent LendingTree report, interest in store credit cards has hit a three-year low, with only 29% of consumers likely to apply this holiday season, down from 44% in 2020. Debt associated with store cards also decreased significantly, with just 33% of cardholders reporting debt, compared to 49% last year. While average APRs remain high at 24.27%, store cards are still preferred over buy now, pay later options (29% vs. 21%). Notably, 42% of consumers have closed a store card, primarily due to high interest rates and cessation of shopping at these retailers.

Positive

• None.

Negative

• Interest in store credit cards dropped to 29%, the lowest level since 2018.
• Significant decrease in debt among store cardholders, indicating potential reduced spending.
• 42% of consumers have closed a store credit card, with high interest rates as a major factor.

CHARLOTTE, N.C., Oct. 4, 2021 /PRNewswire/ -- Interest in store credit cards plunged in 2021, according to a new report from LendingTree. However, consumers are still slightly more likely to use store cards to shop during the holidays than trendy buy now, pay later loans.

Key findings

• Interest in applying for store cards drops to its lowest level since 2018. Just 29% of consumers say they're likely to apply for a store credit card this holiday shopping season, compared to 44% in 2020, 32% in 2019 and 24% in 2018.
• Debt falls, too: Just 1 in 3 with a store card said they currently have debt associated with that card. This is a big decrease from 49% in 2020.
• 42% of consumers have closed a store credit card. An additional 13% have had a store card closed by the issuer. The main reasons for voluntary closures were no longer shopping at the store (46%) and high interest rates (35%).
• Average store credit card interest rates remain high, though largely unchanged. The average APR on a new retail credit card offer was 24.27%, up only slightly from 2020's 24.24%.
• Consumers still prefer store cards over buy now, pay later, but it is close. 29% of consumers would be more likely to pay with a store card this holiday season, while 21% would turn to buy now, pay later financing.
• More retailers offer store credit cards than buy now, pay later loans, though many offer both. 67 of the 126 retailers' websites we reviewed offered a store credit card, while 53 offered a BNPL loan. However, 40 retailers made both options available.
• Buy now, pay later options pop up in unexpected places. Paying in installments at department stores and big-box retailers, sure — but doing so at Dollar Tree or Panera Bread? Yep, it's possible there, too.

"Store credit cards and "buy now, pay later" loans can both be useful tools if used wisely," said LendingTree's chief credit analyst, Matt Schulz. "They can offer some much-needed short-term flexibility for families that might need a little bit of help stretching their budget. However, like many financial tools, they're also dangerous when used carelessly or recklessly. Take time to research and understand what you're getting into."

To view the full report, visit: https://www.lendingtree.com/credit-cards/study/store-card-survey-holidays/.

Methodology
LendingTree commissioned Qualtrics to conduct an online survey of 2,050 U.S. consumers from Sept. 14 to Sept. 21, 2021. The survey was administered using a nonprobability-based sample, and quotas were used to ensure the sample base represented the overall population. All responses were reviewed by researchers for quality control.

About LendingTree
LendingTree (NASDAQ: TREE) is the nation's leading online marketplace that connects consumers with the choices they need to be confident in their financial decisions. LendingTree empowers consumers to shop for financial services the same way they would shop for airline tickets or hotel stays, comparing multiple offers from a nationwide network of over 500 partners in one simple search, and can choose the option that best fits their financial needs. Services include mortgage loans, mortgage refinances, auto loans, personal loans, business loans, student loans, insurance, credit cards and more. Through the LendingTree platform, consumers receive free credit scores, credit monitoring and recommendations to improve credit health. LendingTree proactively compares consumers' credit accounts against offers on our network and notifies consumers when there is an opportunity to save money. In short, LendingTree's purpose is to help simplify financial decisions for life's meaningful moments through choice, education and support. LendingTree, LLC is a subsidiary of LendingTree, Inc. For more information, go to www.lendingtree.com, dial 800-555-TREE, like our Facebook page and/or follow us on Twitter @LendingTree

MEDIA CONTACT:
Morgan Lanier
morgan@lendingtreenews.com

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SOURCE LendingTree.com

FAQ

What percentage of consumers are likely to apply for a store credit card this holiday season?

Only 29% of consumers are likely to apply for a store credit card this holiday season according to LendingTree.

How has consumer debt associated with store credit cards changed?

The percentage of consumers with debt on store credit cards has decreased from 49% in 2020 to 33% in 2021.

What is the average interest rate on new retail credit cards?

The average APR on new retail credit cards is 24.27%, reflecting a slight increase from the previous year.

How do consumer preferences compare between store credit cards and buy now, pay later options?

Consumers prefer store credit cards over buy now, pay later options, with 29% favoring store cards against 21% for BNPL.

What are the main reasons consumers close their store credit cards?

The main reasons for closing store credit cards are no longer shopping at the store (46%) and high interest rates (35%).