Money Matters

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Are Store Cards Worth It?


“Would you like to open an account with us today? You will get 15% off on your purchases!”

When you’re at the cash register, it is almost inevitable that a real or virtual salesperson will make a pitch to sign you up for a store credit card. It is easy to be tempted by the one-time discount offered. But, before you get one, it is a good idea to consider the following factors:

What are the benefits?
Beyond the same-day discount, what are the perks you get for having the store card? Points that can be used for purchases? Coupons? Future discounts for using the card?  Also, consider what discounts are offered to regular customers. If you can get extra coupons or discounts by signing up for the email list, it may not be worth getting the store card (and taking the credit-check hit to your credit score).

What is the interest rate?
One of the downfalls of store cards is that the interest rate tends to be higher than for regular credit cards—20% or higher is common. The interest rate is irrelevant if you pay off your balance in full each month, but if you frequently carry a balance, the interest that you pay could exceed any discounts you get. Also, be mindful when cards offer you a 0% interest rate on a large purchase. You are typically required to pay off the balance completely within a specific time period, and if you fail to do so, you may be retroactively be charged interest on the whole purchase.  For a much lower rate, your Credit Union has a range of cards with rates typically half or less many retailer and bank cards.  Learn more here.

How often do you go to the store?
True store cards can only be used at that company’s stores. (This is different from co-branded credit cards, which can be used anywhere and provide rewards from the company sponsoring the card.) It does not make sense to get a card from a store you only shop at once a year. On the other hand, if you go to the store all the time and have difficulty controlling your spending there, getting a store card may only add fuel to the fire.

How good is your credit?
Generally speaking, store cards have many downsides compared to credit cards, such as higher interest rates, lower credit limits, and limited places where they can be used. However, because it’s typically easier to get approved for a store card than a credit card, it can be a good option for those trying to establish or reestablish their credit. 

How many cards do you have currently?
If you already have a significant number of credit store cards, it may be best to pass on another one. Having ten cards means you have to remember ten different due dates and an increased risk of late payment penalties. Also, applying for credit frequently can significantly lower your credit score.

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