Are Store Credit Cards a Good Idea?

young woman shopping, retail store, mall, credit card

“Do you want to save 20 percent today by opening our credit card?” How many times have you heard that question? How many times have you said no?

Stores offer credit cards to build customer loyalty and make more money. Sometimes having a store card can make sense, but most of the time, it’s simply not a good enough offer to be worthwhile. Here are the biggest factors to consider when deciding if it’s a good idea for you to open up a card from your favorite store:


Most stores offer you an additional discount on purchases or even cash back when you shop with them and use their store credit card. For a store you shop at frequently, the benefits of a store card may be worth it for you.

Limits and Fees

When you sign up for a store credit card, you’re typically given a much lower initial limit than you may receive with a credit card from your credit union. Additionally, any fees you may be charged, such as late fees, tend to be much higher for a store card. Take the time to research and consider your options; don’t let yourself get pressured into signing up immediately at the register before you’ve given yourself time to think things through.

Interest Rates

It’s not out of the ordinary for interest rates on store cards to be well above 20% APR. Even though some cards may come with 0% APR for a limited time, be sure you read the fine print before applying. Most of those promotions include specific stipulations regarding when and how the balance must be paid in order to avoid getting charged interest for the entire offer period.

Building Credit

You may be tempted to get the store card to build credit. Applying for any sort of credit will show up on your credit report and affect your credit score. Don’t apply for too many cards or loans at one time, and be cautious of how many new cards you have, as the average age of your accounts is a factor in your credit score. Try building credit by applying for a low-limit credit card at Robins Financial Credit Union. You’ll benefit from the lower APR, fewer fees and dealing with someone you can trust.

Where You Can Use It

If you’re considering getting a store card to use in place of a credit union or bank card – think again. Unless the store card has been co-branded, for example, if the store has partnered with Visa®, MasterCard®, American Express®, etc. to provide their card, they cannot be used elsewhere. Typically, the co-branded cards come with lower APRs than a regular store card, but still usually not as low as your credit union credit card. Co-branded cards are also harder to get – requiring another application, higher credit scores, etc.

Does a Store Credit Card Make Sense for You?

In some cases, getting a store card might not be a bad idea. If you have a good credit history and do not carry high balances on your current credit cards – getting one or two store cards at the stores you go to most often may not affect your credit score significantly. However, since stores typically charge the same APR for all cardholders, having good credit won’t change your rate – you’ll likely still get the same APR as someone with poor credit.

If you’re new to credit and looking to build a positive credit history, a store card could be a big benefit for you. If you can save a lot of money at a store you would have shopped at anyway, that’s another compelling advantage. However, if you think getting the card will mean you will spend more than you normally would have in order to get more rewards, coupons, etc., or if you don’t think you will be able to pay off the balance every month, then it’s not worth it.

If you’re going to pay interest every month, spend more money than normal, or pay a hefty annual fee, then it’s not a good choice. Even worse, if a store credit card lowers your credit score significantly, you could end up paying thousands more in interest on a mortgage or car loan down the road.

For many people, a store credit card doesn’t make sense. But if the benefits outweigh the costs for your individual financial situation, it might be worth it to apply the next time the cashier at your favorite store offers for you to sign up for their card.

If you already have several store cards with high interest rates that you would like to consolidate into one easy payment, consider transferring your balances to our Robins Financial Credit Union Visa® Platinum Rewards Credit Card. Moving your balances from multiple high-rate cards to one card with a much lower rate can help you save. For more information about balance transfers, give us call or stop by one of our branches.

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