Return to The Money Mentor Blog

Are store credit cards worth it?

woman shopping at grocery store with store credit card
March 26, 2019

By Maggie Tomasek

Credit card offers are so pervasive that it’s hard to avoid them – even when you’re just out running errands. A large number of U.S. retailers offer their own card, but are they worth it? We explore the pros and cons of store credit cards to help you choose the right one.

How to apply for a store credit card

It seems like every time I go shopping, at least one cashier asks me to apply for their retail credit card right there in the checkout line. Although this process is usually quick and easy, it’s also important to note that applying for a store credit card likely will come with a hard credit inquiry, which could impact your credit score. You can also apply for most retail cards online or by mail.

Just like with regular credit cards, sometimes you can find out immediately whether you’ve been approved or denied for the card, or it could take a few days for the card issuer to review your application.

Store credit card advantages

Retailers often entice shoppers with extra savings on same-day purchases through offering store credit cards, especially around the holiday shopping season.

In addition to sign-up incentives, some retail cards may offer ongoing discounts whenever you shop to reward you for your loyalty. For example, the Target REDCard offers 5 percent cash back on in-store and online purchases, the Gap Visa card gives you five points per dollar spent on all their brands, and the Amazon Prime Store Card gives you 5 percent cash back on Amazon.com purchases. If you’re a frequent shopper at your retailer of choice, those rewards can really add up.

Also, people with lower credit scores often can more easily qualify for store credit cards. When used responsibly – by paying off your full balance each month and always paying your bills on time – retail cards can be a great way to improve your credit score.

Store credit card disadvantages

The interest rates on many of these store credit cards can end up costing consumers in the end. Cards issued by retailers typically carry much higher interest rates and fees than regular credit cards. In fact, according to CreditCards.com’s 2018 Retail Store Card survey, the average APR for retail cards is 25.64 percent, about five percentage points higher than regular credit cards.

Store credit cards usually come with low credit limits as well. That might not be an issue for you, depending on the store, but it’s definitely something to consider. A low credit limit could affect your credit utilization rate, one of the key factors in determining your credit score.

The perks that come with a store credit card are often not that great, especially when compared to other rewards credit cards out there. For example, if you’re only earning 1 percent cash back on purchases at that retailer, you would be better off using a credit card that allows you to earn rewards on purchases everywhere, like the Alliant Visa Platinum Rewards card, which earns two points for virtually every dollar spent.

Also, watch out for deferred interest promotions. These are payment plans that offer to delay payment of interest, often advertised as “no interest until” a specific date. However, after that date, the interest that has been accruing since the purchase date is charged to the account. If you’re making a large purchase, such as new kitchen appliances or furniture, rather than using the retailer’s risky deferred interest card offer, find a credit card with a 0% intro APR, like the Alliant Visa Platinum card.


Maggie Tomasek is the PR & Content Strategist at Alliant. She began her career as a journalist for newspapers in Utica, N.Y., Des Moines and Cincinnati before moving to Chicago in 2009. Maggie is an eight-time Chicago Marathon finisher and a lifelong creative writer with a passion for comedy. Her mom instilled in her a great sense of fiscal responsibility, and her big sister told her to throw that responsibility out the window every once in a while in the name of life experience. So far, that combination of financial advice has worked out pretty well for her.