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Store credit cards (2020 guide): How they work, best cards
You'll find stellar rewards, plus benefits not offered by general cards.
Best store credit cards to start with
There are hundreds of department store credit cards, and the “best” one often depends on where you spend the most time and money. Ultimately, a store credit card isn’t any good if you can never use it.
If you need a place to start, consider cards from big-box retailers. These tend to be excellent picks, and they can be more flexible because you can usually buy more products with them.
Below, you’ll find our best picks for their respective retailers.
- Target REDcard™ Credit Card: Best closed-loop store card
- Amazon Prime Rewards Visa Signature Card: Best store card for online shopping
- Costco Anywhere Visa® Card by Citi: Best store card for gas
- My Best Buy® Visa® Card: Best store card for flexible spending
- Walmart Rewards™ Mastercard®: Best store card for everyday purchases
Best closed-loop store card
Target REDcard™ Credit Card
Min. credit score
- No annual fee.
- 5% off on eligible purchases at Target and Target.com.
- Free two-day shipping on eligible items at Target.com.
- 30 more days for returns at Target and Target.com.
|Purchase APR||22.9% variable|
|Balance transfer APR||N/A|
|Rewards||5% discount at Target stores and Target online|
Best store card for online shopping
Amazon Prime Rewards Visa Signature Card
Min. credit score
- No annual fee with your eligible Prime membership.
- 5% back at Amazon.com and Whole Foods Market, 2% back at restaurants, gas stations and drugstores. 1% on all other purchases.
- $70 Amazon.com gift card when you're approved.
|Purchase APR||14.24% to 22.24% variable|
|Balance transfer APR||14.24% to 22.24% variable|
|Welcome offer||$70 Amazon.com gift card upon approval|
|Rewards||5% back at Amazon.com and Whole Foods Market, 2% back at restaurants, gas stations and drugstores and 1% back on all other purchases|
Best store card for gas
Costco Anywhere Visa® Card by Citi
Min. credit score
- No annual fee with your eligible Costco membership.
- 4% cash back on eligible gas for the first $7,000 per year, then 1%. 3% cash back on restaurant and eligible travel purchases. 2% cash back on Costco and Costco.com purchases. 1% cash back on all other purchases.
|Purchase APR||15.24% variable|
|Balance transfer APR||15.24% variable|
|Rewards||4% at gas stations on up to $7,000 annually (then 1%), 3% at restaurants and on travel, 2% at Costco and 1% on all other purchases|
Best store card for flexible spending
My Best Buy® Visa® Card
Min. credit score
- No annual fee for the Platinum version, but $59 for the Gold version.
- 5% back in rewards at Best Buy, and 6% back for My Best Buy Elite Plus members. Or get access to deferred interest on select purchases.
- 3% back in rewards on gas purchases for a limited time. 2% back on dining and grocery purchases. 1% back on other eligible purchases.
|Annual Fee||Up to $59|
|Purchase APR||11.9% intro for the first up to 48 months reduced rate (then from 25.24% variable)|
|Balance transfer APR||N/A|
5% back at Best Buy or 6% back in rewards for Elite Plus members, 3% on gas, 2% on dining and groceries and 1% on all other purchases
Best store card for everyday purchases
Walmart Rewards™ Mastercard®
Min. credit score
- No annual fee.
- Earn 5% back on purchases made at Walmart.com and on purchases made through Walmart Grocery Pickup and Delivery. Earn 2% back on restaurants and travel and 1% back everywhere else.
- Earn 5% back on in-store purchases made with Walmart Pay for the first 12 months after approval. After the introductory period, you'll earn 2% back on in-store purchases.
- No foreign transaction fees.
|Purchase APR||17.99%, 23.24% or 26.99% variable|
|Balance transfer APR||17.99%, 23.24% or 26.99% variable|
|Rewards||5% back at Walmart.com, 5% in-store with Walmart Pay for the first 12 months (then 2%), 2% on restaurants and travel and 1% on all other purchases|
How we chose our best cards
The value of a store credit card is heavily dependent on where a consumer shops. Given this, we picked cards for our list based on which products were most effective for their respective retailers. We placed heavy value on the highest rewards rates. When appropriate, we considered cards with standout benefits.
What’s changed in 2020
The Walmart Rewards™ Mastercard® hit the ground running this year, launching with a great earning rate able competitive with the Target REDcard.
Compare more store credit cards
If you want more options for store credit cards, consider the products below. Some of the cards may be good choices if you’re rebuilding credit, such as the Fingerhut FreshStart® Credit Account.
What are store credit cards?
These are credit cards issued by retailers, typically valid only in their respective department store networks, much like in-store financing. They may offer benefits such as store-exclusive rewards and discounts.
Department store credit cards are valid outside of their issuing retailers if they’re affiliated with major card networks, such as Visa or Mastercard.
Here’s an example of a store credit card
The Hot Topic Guest List Credit Card is one example. You can use it only for purchases at Hot Topic, and you’ll earn 1 point for every dollar you spend there. Each time you earn 100 points, you’ll earn a $5 credit you can apply toward Hot Topic purchases.
You’ll also receive store-specific perks such as shipping discounts, birthday offers and early access to sales.
Why get a department store credit card?
- You’re a loyal shopper at a certain retailer.
If you can’t wait to spend money with your favorite retailer, a store credit card can reward you handsomely for your loyalty. Typically, you’ll earn stronger points or cash back than you would with other cards.For non-diehards, it might be better worth their time to shop with a general rewards card.
- You want store-specific perks you won’t find with general credit cards.
Store credit cards can offer powerful, unique perks you won’t find with a general card. These might include store discounts, special financing and exclusive access to events.
- You want a credit card, but your credit score isn’t great.
Store-card providers are often more willing to approve consumers with fair credit. This could be a viable way to get a card and start building credit.
Pros and cons of using store credit cards
Like any other product, there are advantages and disadvantages of store credit cards.
- Rewards. Store credit cards reward you with points you can use to shave a few dollars off your next purchase.
- Bonuses. Some store credit cards have sweeteners like gift certificates or bonus points on signup.
- Shopping benefits. You may be eligible for exclusive extras such as special financing or free shipping.
- Interest rates. Store credit card debts generally accrue interest at a higher rate than other credit cards.
- Limitations. You may earn fewer points per dollar spent when you shop at a retailer not affiliated with the store card provider. Or you may not be able to use your card at all outside the affiliated store network.
Alternatives to store credit cards
Store credit cards can be lucrative, but they may not always be the best choice. Sometimes, a general rewards credit card can be superior if it offers great rewards while giving you the flexibility to spend elsewhere.
If you’re not sure whether you’ll get enough value from a store credit card, consider a card that offers flat-rate rewards — that is, the same rewards rate on every purchase.
Here are a few of our favorites:
- Citi® Double Cash Card.
You’ll earn 1% cash back on all purchases, and another 1% as you pay them off. Not only is this card a great choice for store purchases, but it’s also excellent for other types of spending. Plus, you’ll pay no annual fee.
- Capital One® Venture® Rewards Credit Card.
If you prefer travel miles, try this card. While you’ll pay a $95 annual fee starting the second year, you’ll earn 2x miles on every purchase. You can redeem these miles for travel purchases, or transfer them to Capital One’s 15 travel partners for even more redemption flexibility.
- Alliant Cashback Visa® Signature Credit Card.
This card has a $99 annual fee starting the second year, so it’s best for those who spend enough to earn significant rewards. If that’s you, you’ll enjoy earning 2.5% cash back on all purchases your first card year and 2.5% cash back on all purchases after that.
Store credit cards: Closed-loop vs. open-loop
Before applying for a store credit card, know whether it’s closed-loop or open-loop.
- Closed-loop means you can use the card only with the issuing store or its designated partners.
- Open-loop means you can use the card anywhere that accepts its card network. For example, you might see a Visa logo on the card, meaning the card is valid anywhere Visa is accepted.
Store credit cards may come in both closed-loop and open-loop versions. Providers sometimes offer open-loop cards to consumers with better credit scores, and closed-loop cards to those with shakier credit.
What features will I find in department store credit cards?
Benefits will vary by the store credit card, of which there are many. Here are a few features you may find:
You may receive points for spending on your card. When evaluating a card, look at its rewards terms to check how many points you’ll earn for different spending. Depending on whether your card is closed-loop or open-loop, you could earn rewards only at a certain retailer or on all spending.When you accumulate enough points, you can redeem them for items such as rewards certificates.
You may need to dig deeper to find a store card’s reward structure
If you landed on the Forever 21 Credit Card‘s application page and wanted to know the rewards you’d receive, here’s what you’d do: Click on the link titled Rewards terms & conditions. A sidebar will pop up with this information:
You’ll see the card comes in two versions: the Forever 21 Credit Card and the Forever 21 Visa Card. Check the difference in rewards structures:
- With both cards, you’ll earn 3x points at Forever 21 stores in the US, excluding US territories.
- Only the Forever 21 Visa Card also offers 2x points at qualifying restaurants and 1x points on all other purchases.
- Special financing.
You may be able to pay no interest on certain items if you pay them off within a specified period. This is known as deferred interest. It could be a great deal, but be sure to pay off the entire purchase in time or it’ll collect interest for the entire period.Check your card’s terms and conditions to see what the normal APR is. It’ll often be higher than the average credit card APR of around 17%.
- Shipping benefits.
Use your card for online orders and you may receive free shipping and returns.
- One-time bonus.
You may receive some type of bonus for using your card for the first time, such as a discount.
- Unique offers.
Your card provider is likely to send you offers, such as discounts and birthday deals. You may also receive invitations to exclusive events.
How to choose the best store credit cards
There are countless retailers, and many of them offer their own store cards. Choosing one comes down to a few key factors:
- Do you shop at a certain store?
This is probably the easiest place to start. If you don’t normally shop at a given store, you probably shouldn’t apply for the corresponding store card!
- Look at the rewards.
Check the rewards rate you’ll earn on store purchases. If the card is open-loop, you may earn bonus rewards for other categories too.One of the most important things to consider is whether you’ll regularly earn bonus rewards from the card. For example, a 5% rewards rate at the store might be great, but it won’t mean much if you never shop there. It might not be worth picking up the card just to earn more rewards once in a blue moon.
- What are the store benefits of owning the card?
A store card can sometimes be worth picking up just because of its benefits. You might want access to free shipping, for example, or invitations to exclusive events. Carefully check a card’s benefits page to see if there are any can’t-miss features.
- How easy is the card to use?
Store credit cards can sometimes have more restrictions than general credit cards. You may, for example, need a store membership in order to apply for a card. And you’ll want to check whether a card is open-loop or closed-loop. With store cards, you often earn a rewards certificate only after you reach a certain number of points. Check what this threshold might be, and consider how easily you can reach it.
Watch your card’s APR
Store credit cards tend to have very high interest rates. That means it can be an especially poor choice to carry a balance on your card month to month.
While it may be tempting to pay off your purchases much later, we recommend clearing your balance in full each billing cycle. This will go a long way toward keeping you out of debt.
Consider whether you spend enough with a retailer to justify picking up a store credit card. If you do, you can find excellent rewards rates. Also, consider store-card benefits, which can offer access to extras you won’t find elsewhere.
If you’re not sure a store credit card is the right choice, there are plenty of general rewards cards to choose from. A cashback card can be an especially good pick.
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