Are Store Credit Cards Worth It?

Are Store Credit Cards Worth It?

You step up to the cash register to buy your items, and as the cashier rings you up, they ask if you’d like to open a store credit card. You could save 15% off today's purchase if you're approved!

The offer sounds tempting, especially if you’re buying a lot that day. But are store credit cards worth it? Here’s a look at the benefits and drawbacks of getting one. 

What are Store Credit Cards?

Store credit cards can only be used at a certain location or group of retailers. Some stores offer co-branded credit cards with a major credit card provider that you can use anywhere, but those generally have more qualification requirements and aren’t strictly store credit cards. 

Stores use branded credit cards to entice you to buy more at their locations. They may offer rewards or discounts when you spend a certain amount of money, make a set number of purchases, or buy a predetermined amount of merchandise. Store credit cards can impact your credit score even though they have limited usage. 

Drawbacks to Using Store Credit Cards

While getting a credit card at your favorite store sounds fun — just imagine the shopping trips! — there can be negatives to securing a retail credit card. Watch out for these possible drawbacks: 

  • High annual percentage rates (APR): The APR is the interest you pay on your purchase, which builds up over time. The longer you take to pay off your credit card, the more interest you’ll accumulate. Store credit cards tend to have higher APRs than general-purpose credit cards, which can wipe out any savings or rewards you may receive with the store credit card. 
  • Deferred interest: Many credit cards offer zero percent interest on purchases you make within an initial offer period. But read the contract closely. Those terms may reference deferred interest, which means after the initial offer period has expired, you’ll have to pay interest on any unpaid balance accrued beginning from the date you signed up for the credit card. This interest can add up.
  • Limitations on rewards: You may sign up for a card because of what seems like a great rewards program but then find the reality is quite different. Reward redemption is often limited to products you buy in the store. You may not have use for such items if the credit card is at a specialty retailer. Or you may only be able to redeem your reward points on purchases you make with the credit card itself. There may be additional restrictions, as well, such as items that aren’t eligible for reward redemption, limited dates to use the rewards, or loss of rewards if they’re not spent in a set period. 

Benefit of Store Credit Cards: Building Credit

One reason many people get store credit cards is to build their credit score. Most store programs have less-stringent qualifications for applicants than a general-purpose card. Depending on the criteria used to determine eligibility, you may be able to get a store credit card even if you have little to no credit history or a low credit rating. 

If you recently graduated from college but don’t have any credit cards or established credit, qualifying for a general-purpose credit card may be difficult. Getting a store card and making regular, timely payments can help you establish a credit history that could help you secure a general-purpose credit card down the road. 

Someone who has poor credit may also be able to use a store credit card to help rebuild their score. Store cards often have smaller credit limits and are less difficult to qualify for. By getting a store credit card, buying a small amount of merchandise, and paying off that balance, you may be able to slowly rebuild your credit score. 

Choose a Card that Rewards You No Matter Where You Shop

Next time you’re presented with a store credit card offer as you’re preparing to make a purchase, pause and think about whether it’ll truly benefit you in the long run. If you find yourself wishing for a credit card that would reward you no matter where you shop, instead, consider our Founder’s Rewards Card. It gives you the freedom to earn unlimited cash rewards on every purchase*.

Apply for our Founder's Card TodaySome exclusions may apply. 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.