by Sharelle Burt
July 31, 2024
Macy’s needs to tighten up….
Retail giant Macy’s may be losing customers after a viral TikTok video expressed concern over its credit card’s massive interest rate of 35%.
A video found on the Latina Plant Priestess (@latinaplantpriestess) TikTok account went viral after a customer received a letter about the increased APR. The woman on camera warned fellow Macy’s customers that, even with good or excellent credit, the interest rate on the card will be 34.39%. “Here’s a warning, everyone. I got this letter as an update from Macy’s; my credit card, I have excellent credit,” she said.
“Oh, look at what it says now,” showing that the APR on the card is jumping up to 34.49%. “They are out of their damn minds. They can close my account.”
The letter says customers have until Aug. 26 to challenge the new rate, but if not, according to the TikToker’s interpretation, “You know that they lost me. I was a customer. They are cray cray.”
According to 10 WBNS, customers started to receive the letters in April 2024. Experts label the increase as a nationwide trend worthy of attention but admit that Macy’s rate is extremely high. “So, credit card rates have been pushed to record highs in recent months, Bankrate senior industry analyst Ted Rossman said. “The national average has jumped about four and a half points since the Fed started raising rates; some cards have jumped even more.”
Rossman pointed out that retail industries have the highest APRs, highlighting several brands with rates over 30%, such as Petco and ExxonMobil. The average rate for most credit cards is 20%.
The analyst said it’s not just interest rates that consumers should pay attention to. Rossman said retailers are also raising rates to mimic the Consumer Financial Protection Bureau’s (CFPB) efforts to lower late fees. “Right now, the average credit card late fee is $32, and the CFPB is trying to bring it down to $8. They were actually supposed to do it in May, and then a federal judge struck that down temporarily, and it’s still kind of winding its way through the courts,” he said.
“Store credit cards rely on late fees more than your general purpose Amex or Capital One card, so a lot of store card issuers have begun pulling other levers to compensate for what may be a drop in late fee revenue.”
Comments on the TikTok video call out the company for the aggressive rate; some even said there is nothing in the store worth such a high rate. “I have the same situation. I also have a Macy’s card. There is not one thing in Macy’s that is worth buying at 34% interest,” @bakwin67 said.
Other users listed companies like TJMaxx, Marshall’s, JCPenny’s, and Kohl’s as doing the same thing. “Tjmaxx, Marshall’s, HomeGoods cards are the exact same! I hate that I even opened a card with them,” @rozzckz wrote.
Some video viewers advised that paying off the credit card can help alleviate some of the promoted fees and penalties instead of simply closing the account. “Just pay your card off as soon as you use it. You will never pay that interest so pay no mind to that and do not close your account because it’s going to look bad on your credit profile,” @diamond said.
Consumer credit reporting company Experian agrees with that concept. “In general, keep unused credit cards open so you benefit from longer average credit history and lower credit utilization,” the company said. “Consider putting one small regular purchase on the card and paying it off automatically to keep the card active.”
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