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.
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
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.
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.
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.
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.
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.
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.
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.
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
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!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
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 email@example.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.
4 Important Disclosures for LendKey.
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.
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
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|