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

store credit cards

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

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.


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.


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.


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.


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.


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.


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.


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


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.

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