Don’t Sign Up for a Store Credit Card Unless It’s One of These

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

store credit cards
Logo

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

I always brace myself for that moment at the cash register when the cashier asks me if I want to apply for a store credit card.

“You can get a discount on today’s purchase,” they always say. And who doesn’t love discounts?

Not all store credit cards are worth having, though, even with a discount. Find out how you can tell the difference between a store credit card that’s a gem and one that’s a drain on your wallet.

Why it’s best to avoid most store credit cards

Store credit cards are popular because they’re easy to get and offer extra perks to loyal shoppers. But unless you know what you’re getting into, they often aren’t worth the trouble. Here’s why.

Restrictive acceptance

Most store credit cards are closed-loops cards, meaning you can use them at only one store. Depending on how many stores you shop at regularly, you could have several cards to manage.

Low credit limits

If you’re working to rebuild your credit or just starting to build it, store credit cards are low-hanging fruit. However, they often come with low credit limits, sometimes starting you out at $200 or $300.

Just remember: A big part of your credit score is how much of your available credit you use. So, if you have a low credit limit, you have to use the card sparingly to keep a high credit utilization from hurting your credit score.

Rewards often aren’t worth it

The upfront discount most retailers offer as a carrot is usually a small fraction of what you could get with a decent cash-back credit card.

For example, Kohl’s offers a 25 percent discount on your first purchase with its card. But you’d have to spend $600 at one time to match the Chase Freedom Unlimited credit card’s $150 sign-up bonus.

You might get bonus rewards and special promotions with your card. However, they’re good at that store only, limiting your redemption options.

High interest rates

The average credit card APR is 12.77%, according to May 2017 Federal Reserve data. But the average store credit card APR is 23.84%, according to CreditCards.com.

In other words, if you have a store credit card, make sure you pay off your balance in full every month. Otherwise, you’re looking at paying a lot more in interest.

4 best store credit cards

Not all store credit cards are bad. Some can be just as rewarding as the best cash-back credit cards on the market.

Here’s a quick summary of the best store credit cards. Read on to learn more about their pros and cons.

Amazon Rewards Visa Signature Card Best for online shopping
Costco Anywhere Visa Card by Citi Best for gas and groceries
Target REDcard Best for everyday shopping
Gap Inc. Visa Card Best for clothes shopping

Amazon Rewards Visa Signature Card

Amazon is the largest online retailer in the U.S., and you can get just about anything on its website. If you prefer to shop from the comfort of your couch, the Amazon Rewards Visa Signature Card is a must-have.

Benefits

Standout rewards

If you’re not an Amazon Prime member, you’ll the following rewards:

  • 3 percent cash back at Amazon
  • 2 percent cash back at restaurants, gas stations, and drugstores
  • 1 percent cash back everywhere else
  • A $50 Amazon gift card upon approval

If you’re an Amazon Prime member, though, the rewards are even sweeter. You’ll get 5 percent cash back on Amazon purchases and a $70 Amazon gift card when your application is approved.

As you can tell from the bonus rewards categories, this is an open-loop card, so you can use it anywhere.

No foreign transaction fees

This perk is impressive because it’s usually reserved for travel credit cards.

The typical credit card foreign transaction fee is 3 percent, so if you head overseas, bring this card with you.

Travel protections

Here’s another reason to take this card with you when you travel: You’ll get baggage delay insurance, lost luggage reimbursement, and travel accident insurance.

Drawbacks

Wide APR range

The Amazon Rewards card’s APR ranges from 15.24% to 23.24%, depending on your creditworthiness. So, if you have great credit, you could qualify for a decent APR. But if not, you could end up with an APR much higher than the average.

Maximizing rewards will cost you

The card doesn’t charge an annual fee. But if you want the full 5 percent back on Amazon purchases, you have to be a Prime member, which will cost you $99 per year.

Of course, Amazon Prime comes with several benefits that make its annual fee worthwhile for loyal shoppers. But if you don’t already have Prime, you’ll have to spend $4,950 per year on Amazon purchases with the card to make up for the fee.

Costco Anywhere Visa Card by Citi

The Costco Anywhere Visa Card isn’t just one of the best store credit cards — it’s one of the best cash-back credit cards, period.

Benefits

Rewards are hard to beat

The card offers an impressive set of bonus rewards for major spending categories. You’ll earn the following:

  • 4 percent cash back on eligible gas purchases up to $7,000 spent per year
  • 3 percent cash back on restaurant and eligible travel purchases
  • 2 percent cash back on Costco purchases in store and online
  • 1 percent cash back everywhere else

And it’s a Visa card, so you can use it anywhere Visa is accepted.

Introductory 0% APR promotion

If you need some time to pay off a big purchase, you can do it with this card. You’ll get a 0% APR on purchases for seven months. After that, the ongoing APR of 16.24% is much lower than the average for store credit cards.

Travel protections

You’ll get special perks if you use your Costco Anywhere Visa when you travel, including trip cancellation and interruption protection, travel accident insurance, and travel and emergency assistance.

Drawbacks

You need a Costco membership

The card itself doesn’t charge an annual fee, but you have to be a Costco member to use it. Memberships start at $55 per year.

What’s more, your card can be closed if you let your Costco membership lapse, causing you to forfeit any cash back you’ve earned and haven’t redeemed.

Your redemption options are limited

With the Costco Anywhere Visa, you can redeem your cash back only once a year. Costco sends it in check form via U.S. mail with your February billing statement. You can cash the check or use it on a purchase at your local Costco store.

Target REDcard

If you’re not big on online shopping, your local Target likely has most of the things you need for your everyday purchases. If not, the Target REDcard also works on Target’s website.

Benefits

Solid, no-fuss rewards

You don’t have to memorize bonus rewards categories with the REDcard.

Instead, you’ll get a 5 percent discount on (almost) all Target purchases in store and online. Review the card’s program rules to see which purchases aren’t eligible.

No annual fee

The REDcard doesn’t have an annual fee. And unlike the Costco Anywhere Visa and Amazon Rewards cards, there aren’t any caveats.

Other sweet perks

Loyal Target shoppers will also benefit from free shipping on most items purchased online and an extra 30 days to return damaged or unwanted items.

Drawbacks

Closed-loop card

You can’t use the REDcard anywhere but Target.

If you do most of your shopping there, it might not be an issue. But if you shop there only occasionally, it might not be worth keeping track of another credit card.

High APR

You’ll pay a 23.65% APR on this card if you carry a balance. That’s on par with the average APR for store credit cards, but it’s much higher than the average for other credit cards.

Gap Inc. Visa Card

If you tend to shop for clothes at Gap and its other brands (Old Navy, Banana Republic, Athleta) then the Gap Inc. Visa Card is worth considering. It’s an open-loop card too, so you can use it anywhere.

Note that this card is different from the Gap Inc. Credit Card, which is a closed-loop card you can use only at Gap brands.

Benefits

Rewards and discounts

You’ll earn five points per dollar spent at Gap and any of its other brands. You’ll also earn one point per dollar spent elsewhere.

When you sign up for the card, you’ll get a 20 percent discount and free shipping on your first order. You’ll also get 10 percent off every time you shop at Gap and Gap Factory stores as well as access to special discount events.

Other benefits

Every year, you’ll get a special birthday gift — in addition to paying no annual fee. You also don’t need to worry about keeping track of your receipts for returns because Gap tracks your orders with the card.

Lastly, you’ll get Gap Silver status if you earn at least 5,000 points in a calendar year. Perks that come with silver status include:

  • Access to special events
  • Free basic alterations on Banana Republic purchases
  • Free shipping on online orders
  • Priority customer service
  • A coupon good for anytime

Drawbacks

High APR

This card’s APR is high, even for a store credit card. The ongoing APR is 25.74%, so be sure to avoid carrying a balance from month to month.

Limited value beyond Gap

If you don’t shop for clothes often or you shop deals everywhere, this card won’t provide much value. It’s an open-loop card that offers one point per dollar on non-Gap brand purchases, but there are several cash-back credit cards that offer more than that.

Make your shopping at lot more rewarding

When you’re confronted with the chance to sign up for a store credit card to get a discount, the best response in most cases is to refrain.

If you shop somewhere regularly, though, it might be worth considering that store’s credit card. If not, opt for a card that allows you to make purchases elsewhere and gives you more options to earn rewards. Let ongoing benefits drive your decision instead of sign-up discounts and bonuses.

If you choose the right card, your everyday shopping will become a lot more rewarding.

Interested in refinancing student loans?

Here are the top 6 lenders of 2018!
LenderVariable APREligible Degrees 
Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at hello@earnest.com, or call 888-601-2801 for more information on ourstudent loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.


2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.

Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.

However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 3.899% APR to 7.979% APR (with AutoPay). Variable rates from 2.470% APR to 6.990% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.470% APR assumes current 1 month LIBOR rate of 2.30% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.
  2. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

4 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.


5 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.

All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.


6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of November 1, 2018, the one-month LIBOR rate is 2.29%. Variable interest rates range from 2.79%-8.39% (2.79%-8.39% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.75%-8.69% (3.75%-8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled. Applicants with an Associate’s degree or with no degree must have made at least 12 qualifying payments after leaving school. Qualifying payments are the most recent on time and consecutive payments of principal and interest on the loans being refinanced. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a cosigner who is a U.S. citizen or permanent resident. The cosigner (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a cosigner will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.

2.47% – 6.99%3Undergrad
& Graduate

Visit SoFi

2.47% – 6.30%1Undergrad
& Graduate

Visit Earnest

2.51% – 8.09%4Undergrad
& Graduate

Visit Lendkey

3.02% – 6.44%2Undergrad
& Graduate

Visit Laurel Road

2.69% – 7.21%5Undergrad
& Graduate

Visit CommonBond

2.79% – 8.39%6Undergrad
& Graduate

Visit Citizens

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.