Store credit cards

How to compare store credit cards

When looking to add a store card to your wallet, here’s what you should keep in mind:

• Rewards. Top-of-the-line store cards come with 5% back or the equivalent in points on all purchases made at the store. Some cards come with a lower rewards rate. Consider whether the rewards you earn are offer higher value than what you could earn with a standard credit card.
• Store benefits. Rewards aren’t the only store card benefit. Often, you get additional perks like discounts, free shipping, more time to return your items and even special offers on your birthday.
• Credit score. The best store cards typically require a good credit score of 670 or higher. This often gives you access to the open-loop card version that you can use anywhere where cards are an accepted payment method. Having a lower credit score typically lands you the closed-loop version you can only use at the store. Of course, this applies to the cards with two versions.
• Deferred interest. Some store cards come with deferred interest options. This lets you make a purchase and pay it off without paying interest for many months. However, if you fail to fully pay off the purchase by the time the interest-free period expires, you’ll be liable for the interest accrued from the day you made your purchase.

Department store credit cards

Rather than a super niche store card like the American Eagle Real Rewards credit card, you might instead consider picking up a department store credit card, like those offered by Target or Walmart. The primary advantage you’ll get over a more niche store card is the ability to earn on a wider variety of products. Target, for example, offers clothing items in addition to household items, toys and more. Here are a few of our favorite department store credit cards to check out.

• Target REDcard™ Credit Card. Target’s cobranded credit card set the baseline for what a strong store credit card should look like. It offers a powerful 5% back on Target purchases, including Target online purchases, and additional store perks like two-day shipping online purchases, and an extended window on exchanges and returns.
• Walmart Rewards™ Mastercard®. Walmart stepped up to the precedent set by Target and released a powerful store card of their own. Like the Target REDcard™, it earns 5% back on online Walmart purchases, though it only earns 5% back on in-store purchases for the first 12 months of account opening before reverting to 2%. Still, the card also earns outside of Walmart, helping you work toward your next Walmart discount even when you’re spending elsewhere.
• Costco Anywhere Visa® Card by Citi. The Costco Anywhere Visa has the distinction of not just being a great card for Costco purchases, but a great card for earning rewards on gas purchases as well. You can earn 4% back on gas purchases on up to $7,000 total each year, before reverting to 1%. If you’re a regular big-box shopper, the Costco Anywhere Visa should be high on your list of cards to add to your wallet.
• Sam's Club® Mastercard®. A newer addition to the available department store cards on the market, the Sam's Club Mastercard is a powerful card for earning rewards on Sam’s Club purchases and gas, much like the Costco Anywhere Visa. Which you choose will ultimately come down to store availability or your preferred place to shop. With that said, the Sam's Club Mastercard rewards system is a bit trickier to use than Costco’s and best benefits Sam’s Club Plus members.

Beware of predatory store cards

Not all store cards are created equal. Some offer excellent benefits and rewards you can earn even outside the store. Others charge high fees and don’t report your activity to credit bureaus. Here’s an example of two completely different store credit cards and how they compare:

What to watch out for when considering store cards

The rates, fees and rewards you receive on many store cards are more limiting and punishing than you’d find on a standard rewards card. That’s because store cards are targeted at a wider consumer base than standard credit cards.

To make a store card more accessible to store shoppers, providers lower the required credit score to qualify for them. This directly affects the card’s terms, resulting in a higher APR and fees to make up for the higher likelihood of account delinquency.

If you’re thinking of picking up a store card, don’t apply at the checkout counter. Instead, do your research online or ask for a pamphlet so you can review the card’s terms and reward structure to make sure the card is a good fit.

When to choose a store card over a traditional credit card

Store credit cards are a great choice for those who frequently shop at a particular store. Some cards require that you are a store member before you apply, which often comes with an annual membership fee. If you already pay that fee and you believe you can use your card’s benefits, a store card is definitely worth considering.

However, if you’re not sure whether you’ll get enough value from a store credit card, consider a card that offers flat-rate rewards — that is, the same rewards rate on every purchase. For example, the Citi® Double Cash Card lets you earn 1% cash back on all purchases, and another 1% as you pay them off. Not only is this card a great choice for store purchases, but it’s also excellent for other types of spending. Plus, you’ll pay no annual fee.

How to choose a store credit card for bad credit

Consider these factors when choosing a store credit card.

• The affiliated retailer. Most likely, your store credit card will be valid only at its affiliated retailer. If you’re opening a card purely to improve your credit score, see whether there are small purchases you can make at the retailer.
• Annual fee. Many store credit cards don’t have annual fees. Before applying for a card, however, check its pricing table to confirm its cost.
• Interest rate. Interest is the charge you pay for borrowing money from your credit card provider. Store credit cards typically have very high APRs, especially for applicants with bad credit. Consider paying off your balance in full each month to avoid interest.
• Repayment terms. Some bad-credit products have unusual repayment terms. Before applying for a product, check its terms and conditions to see how you can pay off the purchases you make.
• Extra fees. Some providers may tack on extra fees you didn’t expect. To get a handle on what you might pay, dig into the card’s terms and pricing information. Know what you’re getting into before applying.

Pros and cons of store credit cards for bad credit

Store credit cards may be a great option if you have bad credit, but you might want to hit the brakes before applying. Weigh these pros and cons before settling on a store card.

Is a store credit card for bad credit right for me?

A store credit card might be ideal if you already spend at the retailer that issues the card. Open a card only if you can make payments on time. Otherwise, you’ll take hits to your credit score.

If you’re not sure about a store credit card, consider these other methods to improve your credit score:

• Open a secured credit card with no credit check. This can be superior to a store card in part because you can use it almost anywhere, instead of only at a specific retailer. On the downside, you must submit an upfront security deposit before you can open an account. For a no-credit check secured card, consider the OpenSky® Secured Visa® Credit Card, which consistently garners great reviews.
• Take out a credit-builder loan. When you take out a credit-builder loan, the bank will put the money into a savings account. To access the money, make regular payments over 12 to 24 months and eventually pay off the entire loan.

Bottom line

Consider whether you spend enough with a retailer to justify picking up a store credit card. If you do, you can find excellent rewards rates. Also, consider store-card benefits, which can offer access to extras you won’t find elsewhere.

If you’re not sure a store credit card is the right choice, there are plenty of general rewards cards to choose from. A cashback card can be an especially good pick.

Written by

Steven Dashiell

Senior writer

Steven Dashiell is an editor for Bankrate and CreditCards.com and formally a personal finance writer at Finder, specializing in credit cards, banking and growing and protecting your income. His insights and expertise has been featured on Nasdaq, U.S. News & World Report, Time, CBS, ABC, Fox Business, Lifehacker and Martha Stewart Living, among other top media. Steve holds a BA in English from University of Maryland, Baltimore County, minoring in composition and rhetoric. In his spare time Steve nerds out on birds, paints and plays a whole lot of Street Fighter. See full bio

Steven's expertise

Steven has written 62 Finder guides across topics including:

• Credit cards
• Budgeting and saving
• Rewards programs