Navigating the World of Store Credit Cards

Navigating the World of Store Credit Cards

Choosing a credit card can be difficult. It becomes even harder when stores you regularly shop at offer you enticing rewards or incentives to use their cards. But before you apply for a store-branded credit card, there are a few things to consider.

navigating store credit cards

Terms and Conditions

As you would when considering any card, the first thing you’ll want to do is review the terms and conditions. These will outline any annual fee associated with the card, as well any other fees you may incur. If there is an annual fee, you’ll need to determine if it outweighs the rewards you could earn when using the card. Also be aware of the Annual Percentage Rate (APR). This determines the interest you’ll have to pay if you let a balance carry over month to month.  Be sure to read all terms and conditions carefully.

Open and Closed Loop

You’ll want to know whether the store’s credit card is open or closed loop. Open loop credit cards allow the consumer to use the card at any place that accepts credit cards from that payment processor (i.e. Visa, MasterCard). A closed loop store credit card lets the cardholder make purchases only at that retailer’s stores or on their website. Knowing whether a store credit card is open or closed loop can also help you decide whether you should apply for the card. If you frequently shop at a certain store, then it may make sense to get a closed loop card. However, if you almost never shop there, then a closed loop credit card is likely not worth the one-time benefit.


The perks promoted for almost all store credit cards are the incentives they can offer their customers. These come in the form of discounts and cash back rewards that can be earned for using the card. There may be promotional offers associated with the card, as well, like deferred interest on big-ticket purchases.


While store credit cards may have several benefits, they can also have a major con, if you carry a balance. Store credit cards typically have very high interest rates in comparison to a standard credit card. Retail store credit cards have an average APR of 24.99% while the average percentage rate for a general card is 16.15%. This means that carrying a balance on this type of card may end up costing you a lot more than you may receive in benefits and rewards.

Explore All Your Options

Every store’s specific credit card is going to be different based on what they’re offering. The important thing to remember is to do your research. Getting an initial and immediate 20% off the purchase you’re making when you open your card may seem like a great deal, but keep in mind that opening credit cards and not using them regularly may have a negative effect on your credit score and financial footprint. If you carry a balance, you may also end up spending more money on interest payments than the money you save with the discounts the card offers. It’s key to consider what the best options are for you in the short and long term before applying.

To avoid any downsides of using store cards, you might want to go with a more predictable credit card – our Founder’s Card. You can shop anywhere you like and earn unlimited cash rewards* on every purchase.

Want to learn about more ways to be smart with your money? Visit our WalletWorks page.

*You can earn 1.5% cash rewards on purchases. You can earn 2% cash rewards on purchases if you maintain a PSECU checking account and qualifying monthly direct deposit(s) of at least $500. See the Visa® Founder’s Card and Visa® Alumni Rewards Card Rewards Program Terms and Conditions for full details.

The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by PSECU. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.