July 31st 2024.
The popular retail chain, Macy's, may be facing a decrease in their customer base due to a recent TikTok video that shed light on their credit card's exorbitant interest rate of 35%. The video, posted by Latina Plant Priestess, went viral after a customer received a letter notifying them of a jump in their APR. In the video, the woman warned fellow Macy's shoppers that even those with good or excellent credit would be subject to a staggering 34.39% interest rate. She expressed her disbelief, saying "They are out of their damn minds. They can close my account."
The video, which can be found on the @latinaplantpriestess TikTok account, quickly gained traction with viewers, with many expressing shock and concern over the high rate. The letter stated that customers had until August 26th to dispute the new rate, but as the TikToker interpreted, "You know that they lost me. I was a customer. They are cray cray."
According to reports from 10 WBNS, Macy's began sending out these letters in April of 2024. Industry experts have labeled this increase as a nationwide trend that warrants attention, but also acknowledge that Macy's rate is exceptionally high. Bankrate senior industry analyst Ted Rossman stated, "So, credit card rates have been pushed to record highs in recent months. The national average has jumped about four and a half points since the Fed started raising rates; some cards have jumped even more."
Rossman also noted that retail industries tend to have higher APRs, citing several well-known brands with rates over 30%, including Petco and ExxonMobil. The average rate for most credit cards is 20%. He also emphasized that consumers should not only pay attention to interest rates, but also to retailers' efforts to mimic the Consumer Financial Protection Bureau's (CFPB) actions 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, but a federal judge temporarily struck it down, and it's still working its way through the courts," he explained.
Rossman added, "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 have called out Macy's for their aggressive rate, with some even stating that there is nothing in the store worth such a high rate. One user, @bakwin67, shared a similar experience, saying "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."
Other users have mentioned similar situations with companies like TJMaxx, Marshall's, JCPenny's, and Kohl's, expressing their frustration with these high rates. "Tjmaxx, Marshall's, HomeGoods cards are the exact same! I hate that I even opened a card with them," wrote @rozzckz.
Some viewers of the video offered advice, saying that paying off the credit card can help alleviate some of the additional fees and penalties, rather than 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 suggested.
Consumer credit reporting company Experian agrees with this concept, stating, "In general, keep unused credit cards open so you benefit from longer average credit history and lower credit utilization. Consider putting one small regular purchase on the card and paying it off automatically to keep the card active."
In light of this recent controversy, some may be wondering about the future of Macy's partnership with Divine 9. But for now, the collaboration continues with a new frat collection.
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