Interest rates on store credit cards reached a record high of 29% with the holiday shopping season right around the corner. That’s according to Bankrate’s yearly retail cards survey, which uses an average of borrowing rates on 107 popular retail credit card brands.

The highest rates topped 30%, which was unheard of in the store card industry until this year. A whopping 16 retail cards out of 107 surveyed now charge an APR of 32.24%.

Even excellent credit scores must pay this rate to borrow on Academy Sports + Outdoors Card, Burlington Credit Card, Good Sam Rewards Card, and Michaels Credit Card.

Retailers have been leery of breaching 30% up until recently. But the Fed’s big rate boosts this year have put these higher retail rates in line with the rest of the lending business.

Some economists are hopeful that the Fed will cut rates back down in early 2024, but the central bank's rhetoric suggests higher interest rates are still on the table.

Fed rate hikes have emboldened retail credit cards

Since July, the Fed’s rate has sat at 5.5%. It was 3.25% just a year ago.

That’s after the Fed’s target rate was 0-0.25% between April 2020 and March 2022 during the pandemic. Before that, the Fed’s rate was practically zero for most of the 2010s.

A higher Fed rate becomes a problem for consumers because it pushes up interest rates on all sorts of debts. That’s why interest rates on credit cards and other forms of consumer credit have risen sharply over the past year.

Although the Fed isn’t expected to raise interest rates again this year, that hinges on the trajectories of the economy and inflation.

In his most recent speech, Fed chair Jerome Powell said inflation is still too high. That could mean another rate increase or a longer timeline for lower rates again.

If that happens, consumers could pay more interest on their credit cards.

Consumer debt hits records on all counts

With total consumer credit just under $5 trillion, higher retail credit card APRs will add more to an already-massive pile of U.S. consumer debt.

In fact, this past August, credit card debt passed a historic mark of $1 trillion. According to the New York Fed, credit card balances have increased for five consecutive quarters.

Meanwhile, the average interest rate for all cardholders jumped a record 21% in August, according to the Fed data.