Dozens of the largest U.S. retailers and their bank partners jacked up interest rates on their store-branded cards to record highs in the months before the Federal Reserve began cutting rates, as the companies looked to pad profits during a stretch of sluggish sales.

At least 50 companies — including Big Lots, Gap, Petco, Burlington, Macy’s and TJX Companies — increased the APRs on their credit cards between September 2023 and September 2024, according to a review of data gathered by Bankrate.com that examined the nation’s 100 largest retailers. 

Bankrupt home goods chain Big Lots raised its APR by 6 percentage points from 29.99% to 35.99% — the largest increase out of the retailers reviewed by Bankrate. Gap made the second largest increase, a 5 percentage point hike on its Banana Republic, Athleta, Old Navy and namesake cards. Petco came in third with a 4.5 percentage point increase. 

Big Lots, Academy Sports, Burlington, Michael’s and Petco are tied for having the highest APR among the companies Bankrate tracked, at a staggering 35.99% as of September. 

“Up until this rate hiking cycle that we saw from the Fed in 2022 and 2023, 30% was a threshold that few credit cards dared to cross,” Ted Rossman, Bankrate’s senior industry analyst, told CNBC. “But they’ve gone from high to higher these past few years because the Fed pushed rates higher by five and a quarter points and all of a sudden, 29.99% was not the high end anymore. Now we see it’s very common for these store cards to charge over 30%.”

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.

Now, the average interest rate on a store card is at an all-time high just ahead of the holiday shopping season, which is when most consumers sign up for store cards. As credit card debt reaches new highs and delinquencies hit levels not seen since 2011, Rossman warned consumers to think twice before signing up.

“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. “If you pay it off right away and you get the rewards, well, then, that works for you. But we hear many times people sign up for these cards and they don’t even realize what they’re getting into.” 

That’s what happened to Jasmine Matheney, a 35-year-old small business owner in Michigan, when she signed up for her first retail credit card at Nordstrom just before Christmas when she was 18. She was given a $5,000 limit and soon maxed it out, splurging on flashy gifts for her loved ones and new clothes for herself. 

“I went crazy. I bought everything. I had no idea, like, oh, you got to pay this back, honey, and it’s gonna charge you some fees. So ultimately, I end up defaulting on that account,” Matheney recalled in an interview. “It caused me a whirlwind of problems.” 

Matheney’s debt at Nordstrom ended up going into collections, and it took her years to rebuild her credit as a result. 

“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.”