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Store cards – what consumer debtors should think about

On behalf of Bankruptcy Law Firm of Clare Casas on Tuesday, August 19, 2014.

It is a well-known fact that the interest rates on credit cards are high. Currently, the average interest rate consumer debtors in Florida can expect to pay is above 15 percent. However, an outstanding balance on a store card that is not paid off at the end of each month can generally cost debtors even more.

A recent survey indicated that the interest rates charged by some of the biggest retailers in the United States are approximately 8 percent higher than the average interest rate charged on credit cards. While there are some retailers who charge interest rates lower than the average credit card interest rate, others charge up to 10 percent more than the average credit card. The reason for the high interest rate is that store card credit is considered high risk, as credit checks are done more superficially.

Retailers offer consumers different kinds of rewards to encourage their customers to spend more. Often, these rewards increase with increased spending, making it difficult for consumers to ignore. Consumers are led to believe that they benefit, but the high interest rates seldom make the consumer, who carries an outstanding balance, the winner in this scenario.

It is expected that the Federal Reserve will increase interest rates in 2015. An increase in interest rates may affect consumers who have large amounts outstanding on their credit cards. Consumer debtors in Florida who find themselves overwhelmed by debt, particularly unsecured debt such as credit card and store card debt, may be of the ones hardest hit by an interest rate hike. Consumers facing mounting credit card debt may find filing for chapter 7 or Chapter 13 bankruptcy to be a beneficial solution. Opting for one of these possible solutions may provide consumers with a chance to make a fresh start and a renewed effort at achieving financial stability.

Source:, "Store cards can carry higher interest rates", Patricia Sabatini, Aug. 13, 2014

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