Why you should probably decline store credit card offers at checkout
Why you should probably decline store credit card offers at checkout
A woman swiping another woman's credit card through a payment reader while standing in a local clothing store.

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Is a store credit card the right choice for you? Discover.


Key points

  • Store credit cards can be tempting if you’re loyal to a store or brand.
  • However, store credit cards often offer minimal perks and few rewards, and rewards programs are not flexible.
  • Learn about some of the disadvantages of store credit cards.

How many times have you been asked if you want a store credit card while waiting in line? Retail staff are trained to ask this question, so it has become an integral part of the checkout process. If you are asked this question, you should think carefully before agreeing to apply, as a store credit card may not be the best card choice. Keep reading to find out what you need to know about store credit cards.

The difference between store cards and ordinary cards

Many of your favorite retailers promote branded cards. These cards are heavily marketed as a way for shoppers to earn rewards while shopping at their favorite stores.

However, there are notable differences between store cards and regular credit cards.

  • Many store credit cards are closed-loop cards that can only be used with a specific retailer or other associated brands. If you get a closed-loop retail credit card, you can’t also use that card to pay for gas or go to dinner.
  • Most store cards have minimum redemption options. If you want to choose how you redeem your rewards, a store credit card probably isn’t for you.

These are the two main reasons why it might not be the best idea to sign up for a store credit card. Below are a few more reasons why you might want to decline an in-store credit card offer.

Store cards earn minimum rewards

Store credit cards usually earn minimal rewards. Even if you spend a lot of money with your card, the card’s rewards rate may not be worth it. You might end up having a lot of expenses and not a lot of income.

Other rewards cards may have higher reward earning rates. Additionally, most rewards cards allow you to earn rewards across multiple spend categories.

Low credit limits

Store cards often have low credit limits. Your credit limit is the amount you can debit from your card.

Many factors make up your credit score. How much of your available credit you use or your use of credit is an important factor. Your credit usage represents 30% of your FICO® score. For this reason, it is better to have a lower credit utilization.

If you have a low credit limit on a store card, it will be easier to use more of your available credit. This could have a negative impact on your credit score.

In-store credit card discounts are often one-time offers

Many retailers promote an in-store discount as a welcome offer for new cardholders. However, most store credit cards only offer a one-time store discount.

So while you can save 10% on your first purchase when you sign up for the store-branded card, you probably won’t continue to receive a discount (or equivalent discount) on future purchases. Keep this in mind when considering a store card.

Little to no card benefits

Unlike other rewards credit cards, a store credit card won’t have many features or benefits. It may have no benefit besides earning a low rate of rewards on store spend.

Other rewards cards may include benefits such as purchase protection, extended warranty protection, and trip cancellation insurance. A card with more benefits may offer more value.

Above average interest rates

Many store cards also have above average interest rates. Interest charges can become high if you don’t pay your card balance in full each month. You can probably get a different credit card with a lower interest rate.

Paying interest charges is never a good idea. If you plan to hold onto a card balance to give yourself time to pay off a larger purchase, you can apply for a 0% APR credit card.

You should take your time to review credit card options

The worst time to sign up for a credit card is when you’re about to pay for your purchase and are walking out.

You want to make sure you’re making the right choice based on your financial situation and your goals. It is best to consider the card options and carefully review the card details first. It’s almost impossible to do it in the queue.

Store credit cards aren’t the only option

Are store credit cards worth it? For some shoppers, it may be a good idea to get a store card from a preferred retailer. But it’s not the right card for everyone.

Don’t rush to get a store credit card and don’t feel like you have to say yes when asked if you want to apply for one.

There are many other credit cards that offer more flexible and varied rewards. Check out our list of the best rewards credit cards if you’re ready to get a new credit card.

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