You step up to the cash register to buy your items, and as the cashier rings you up, they ask if you’d like to open a store credit card. You could save 15% off today's purchase if you're approved!
The offer sounds tempting, especially if you’re buying a lot that day. But are store credit cards worth it? Here’s a look at the benefits and drawbacks of getting one.
Store credit cards can only be used at a certain location or group of retailers. Some stores offer co-branded credit cards with a major credit card provider that you can use anywhere, but those generally have more qualification requirements and aren’t strictly store credit cards.
Stores use branded credit cards to entice you to buy more at their locations. They may offer rewards or discounts when you spend a certain amount of money, make a set number of purchases, or buy a predetermined amount of merchandise. Store credit cards can impact your credit score even though they have limited usage.
While getting a credit card at your favorite store sounds fun — just imagine the shopping trips! — there can be negatives to securing a retail credit card. Watch out for these possible drawbacks:
One reason many people get store credit cards is to build their credit score. Most store programs have less-stringent qualifications for applicants than a general-purpose card. Depending on the criteria used to determine eligibility, you may be able to get a store credit card even if you have little to no credit history or a low credit rating.
If you recently graduated from college but don’t have any credit cards or established credit, qualifying for a general-purpose credit card may be difficult. Getting a store card and making regular, timely payments can help you establish a credit history that could help you secure a general-purpose credit card down the road.
Someone who has poor credit may also be able to use a store credit card to help rebuild their score. Store cards often have smaller credit limits and are less difficult to qualify for. By getting a store credit card, buying a small amount of merchandise, and paying off that balance, you may be able to slowly rebuild your credit score.
Next time you’re presented with a store credit card offer as you’re preparing to make a purchase, pause and think about whether it’ll truly benefit you in the long run. If you find yourself wishing for a credit card that would reward you no matter where you shop, instead, consider our Founder’s Rewards Card. It gives you the freedom to earn unlimited cash rewards on every purchase*.