I closed my Macy’s account after getting a notice in the mail about higher fees – it’s gouging shoppers & unacceptable

AFTER Macy's announced a 6% rate increased, some credit card holders decided to close their accounts.

Macy's cardholders were notified through a letter that their annual percentage rate would jump to 34.49%.

Previously the rate was 31.99%, which was already high in comparison to the average store credit card interest rate of 28.93%, according to Investopedia.

This move proved to be too much for some shoppers, including Jay Dee, who closed his account after several years.

"Today, after having had a Macy's credit card for most of my adult life, I closed my account. Not because of ay problems with their merchandise or customer service, but because of greed," he wrote in a Facebook post.

He said the rate hike was a form of price gouging and unethical.

Immediately after getting the letter, he called Macy's and canceled his account.

"It's time for people to send a message that this kind of greed is unacceptable," he wrote.

In the comments, shoppers said their credit card rates at companies like Target, JC Penney and Kohls also went up recently.

"I have seen this on many credit card statements. Seems to just be on all of them from gas, department stores etc," wrote one shopper.

WHAT'S BEHIND THE HIKE?

Ted Rossman, a senior industry analyst with Bankrate, said the rate hike didn't come as a surprise to him.

"I mean, I follow this closely so I'm not shocked, but on the face of it, yeah, that's a really high interest rate," Rossman said in an interview with San Diego CBS affiliate KFMB.

He said credit card rates have been pushed to record highs in recent moths.

"The national average has jumped about four and one-half points since the Fed started raising rates, some cards have jumped even more," he said.

Rossman cited the Consumer Financial Protection Bureau (CFPB) efforts to impose lower late fees as another cause of rate hikes.

The CFPB has been pushing to lower the penalty of overdraft and late fees for consumers, but most retailers with credit cards rely on late fee penalties to boost revenue.

APR vs. Interest Rate

Interest rates and annual percentage rates (APRs) are not the same.

• Interest rates refer to the percentage charged on a principal loan amount until it is paid off.
• APR percentages include the interest rate, plus any insurance costs, fees, or closing costs a lender might also charge on a loan.
• In most cases with credit cards, APR percentages are the same as interest rate percentages.
• Customers can often select fixed or variable APRs on other loans.
• A fixed APR means that the interest rate and all other fees are locked in at a certain percentage for the entirety of the loan.
• A variable APR changes with the US market.

Credit: Capital One

Now that that revenue is in danger of getting cut, retailers are making changes to make up the money.

Rossman explained that a Macy's customer paying the 34% rate who only made minimum payments on a $1,000 purchase with the credit card would end up paying over double the original amount.

"The total interest expense would be $1,047," he said.

"So, in other words, you've more than doubled your initial outlay."

Costco shoppers are facing a similar rate hike as the cost of a membership is set to increase in weeks.

Sam's Club members accused the store of price gouging after it announced a free perk would now cost a fee.