You walk into Macy’s for a new outfit. The cashier says, “Wanna save 20% today by signing up for our card?”
Sounds like a no-brainer.
But what if that one decision quietly added seven years of debt to your life?
That’s exactly what’s happening to millions of Americans right now.
Retail credit card debt isn’t just an inconvenience—it’s become a hidden trapdoor into bankruptcy, especially for young or lower-credit consumers. And it’s only getting worse.
Let’s pull back the curtain.
The Credit Card Late Fee Rule That Sparked It All
Back in March 2024, the Consumer Financial Protection Bureau (CFPB) tried to protect consumers with a new rule:
Cap late fees at $8.
Before that, they could run as high as $32.
But big retail card issuers—Bread Financial, Synchrony, Capital One, Citigroup, Barclays—saw their profits threatened. These cards often target subprime borrowers, the folks most likely to miss payments and rack up fees.
So what did they do?
They preemptively jacked up interest rates, many to 36% APR, and tacked on new junk fees like charging $2.99 for paper statements.
Even worse?
When the courts struck down the CFPB’s late fee rule in April 2024, those companies said flat-out:
We’re keeping the rate hikes and the extra fees.
Because now, they get to keep the old late fees AND the new interest hikes.
Why Retail Credit Cards Are Way More Dangerous Than You Think
If you’ve got one of these cards—from places like Macy’s, Kohl’s, Nordstrom, or Tractor Supply—you’re likely dealing with:
- Average APRs over 30% (compared to ~20% for general credit cards)
- Sneaky “gotcha” terms that punish minor mistakes
- Deferred interest traps that can add hundreds or thousands in back-charged interest
Here’s an example straight from the CNBC report:
You finance a $3,000 couch, interest-free for 18 months. You have $50 left when the promo ends. Suddenly, you owe $1,400 in back interest—on the full $3,000.
That’s not just unfair. That’s borderline predatory.
Who’s Getting Targeted the Most?
- Young adults with little or no credit history
- Low-income borrowers with subprime credit scores
- First-time shoppers thinking they’re joining a loyalty program
In fact, up to half of retail cardholders had no credit or subprime credit when they applied.
Some people thought they were just getting discounts. Instead, they unknowingly signed up for a credit card—with all the consequences that follow.
Others reported being pushed into add-on products like insurance they didn’t consent to.
Bankruptcy on the Rise—and Retail Cards Are a Big Reason Why
Between 2021 and 2024, bankruptcy filings went up 5% overall.
But the number of bankruptcies involving retail card debt?
Up 12%.
When you dive into the filings, you see names like Macy’s, Nordstrom, Bass Pro Shops, and Kohl’s popping up again and again.
These are real people, like Joe and Nancy in Mississippi. Losing their home. Listing retailers as creditors. And drowning in interest on stuff they bought years ago.
The Retailers Profit from Your Pain
Why are stores like Kohl’s and Macy’s even offering these cards?
Because they make a ton of money off them.
Partner banks handle the card, but retailers share in the profits—including interest, fees, and everything else that keeps you paying.
From the store’s point of view:
- You get more spending power
- You stay loyal to the brand
- And you quietly rack up fees and interest that keep their balance sheet happy
And guess what?
The lender wants you to pay the minimum, stay stuck, and never quite pay it off—as long as you don’t go bankrupt.
It’s a business model built on long-term consumer debt.
Is This Predatory Lending?
Depends on who you ask.
But even insiders are calling it out.
These aren’t just reckless borrowers maxing out cards on nonsense. These are everyday folks trying to buy furniture, clothes, or cover a basic need—and getting caught in a high-interest loop they didn’t understand.
It’s legal.
It’s profitable.
And it’s ruining lives.
Can You Use a Retail Credit Card Without Getting Burned?
Yes—but only if you treat it like a live grenade.
Here’s how:
- Only use it for a one-time discount, not everyday purchases.
- Pay off the balance in full—especially before a promo ends.
- Never trust deferred interest offers. Read the fine print.
- Set up alerts or autopay to avoid late fees and interest.
- Opt out of paper statement fees (or go paperless, fast).
- Don’t apply at the register. Take time to read the terms first.
As one CNBC reporter admitted:
“I’m a finance reporter. I knew how to use it. Most people at the register? Don’t.”
So… What Now?
If this is already hitting home for you, boop that like button to give this a little love. It helps more people find this message.
💥 If you’re struggling with retail card debt—or just starting to fall behind—don’t wait for it to spiral.
Talk to someone you trust.
I recommend reaching out to Damon Day, someone I trust with honest, no-BS advice about debt.
Also consider reading Eliminate Your Debt Like a Pro — I wrote it with people like you in mind. No shame, no fluff. Just a better path forward.
FAQ: What People Are Asking
Are retail credit cards really that bad?
They can be. With higher-than-average interest rates, junk fees, and misleading promotions, they often trap people in debt longer than traditional cards.
Why do people sign up for these cards?
They’re pitched at the register with flashy discounts. Many customers don’t realize they’re agreeing to a high-interest credit product.
What is deferred interest, and why is it risky?
It’s a promo that offers “0% interest” for a period—but if you don’t pay the full amount in time, they charge retroactive interest on the full purchase.
Can I improve my credit with a retail card?
Only if you pay it off on time and keep balances low. But there are safer cards for credit-building with lower risk.
Is bankruptcy a better option than staying in this kind of debt?
Sometimes, yes. Studies show people who file for bankruptcy often fare better financially than those who don’t.
Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.
Bottom Line?
The system isn’t built to help you.
It’s built to profit off your mistakes.
But now that you know the game—they can’t play you as easily.
📬 Subscribe to GetOutOfDebt.org for more truth bombs like this, plus real solutions that actually work.
Drop a comment below—have you ever struggled with this? Let’s talk about it.
And before you go, boop that like button, subscribe, and check out GetOutOfDebt.org for free resources.
