Here’s why store credit cards aren’t your friend this holiday | Finder.com

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Think twice before applying for a store credit card this holiday season

Store cards are easy to obtain, but often too risky to be worth it.

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Before you scoop up a Walmart or Kohl's Credit Card this Black Friday, know that many store credit cards carry more risks than a standard card and may not match the value of a standard card. Here’s what you need to know before you grab a new card for the holiday season.

Why are store credit cards risky?

Store credit cards tend to differ from standard credit cards in a few key areas:

They often have worse terms

Store credit cards are so easy to qualify for because they often have worse rates and fees than you’d find on a standard rewards card, such as a higher-than-average APR or larger fees. In some cases, they lack the standard features you’d expect on a similar rewards card as well.

Given that we’re heading into the holidays and new video game consoles are around the corner, let’s look at a comparison of the Citi® Double Cash Card and the Gamestop Credit Card.

Citi® Double Cash CardGamestop Credit Card
APR13.99% to 23.99% variable26.99% variable
Annual fee$0$0
Intro APR0% intro on balance transfers for 18 months, reverting to 13.99% to 23.99% variableNone
Balance transfer capabilitiesYesNone
NetworkMastercard
Rewards2% cash back on all purchases (1% when you buy and 1% when you pay)5,000 points per $250, or 2% cash back at Gamestop
Signup bonusNone
  • 5,000 points for signing up
  • 15,000 points for signing up if you’re a Pro or Elite member ($14.99 or $19.99 annually)

There are some stark differences between these cards. To begin with, the Gamestop Credit Card comes with a 26.99% variable APR. This is an incredibly high APR, even by store card standards, which makes carrying a balance on the Gamestop Credit Card a dangerous proposition.

The card also currently lacks an intro APR on purchases to offset that high base APR, so any holiday purchases you make will start accruing interest immediately. While the Citi® Double Cash Card also lacks a purchase intro APR, it’s much less of a blow to the card since the Double Cash offers a much more forgiving APR range.

Many are closed loop

One of the major strengths of standard rewards cards is you can earn rewards no matter where you’re shopping. This isn’t the case for many store cards, which often limit your biggest earning potential to that specific retailer. The same goes for redeeming those points – many store cards only allow for a coupon or statement credit good for that store and nowhere else.

Unless you do some serious shopping at one particular retailer, the rewards limitations of a store card cuts heavily into the overall value of the card over the year, and is harmful even during the holidays. With a standard rewards card, points or cash back you earn can be used to further fund your holiday spending at other retailers.

Perhaps most damning for the Gamestop Credit Card in particular is it’s not affiliated with a major card network like Visa or MasterCard. This means you can make purchases with the Gamestop Credit Card only at GameStop, not at other retailers.

They have lower credit limits

Since store credit cards are more readily available to a wider range of consumers, they’re more likely to have lower credit limits than other types of credit cards.

Depending on your spending needs, this could further damage the card’s usefulness outside of shopping at the affiliated store.

Are there any good store credit cards?

While many store cards are lacking compared to standard rewards cards, there are a few good store cards out there. The Target REDcard™ Credit Card, for example, is a store card done right, offering higher than average rewards on Target purchases, and a variety of Target perks such as two-day shipping and an extended window for returns and exchanges.

The Walmart Rewards™ Mastercard® is another great example. It not only earns accelerated rewards on Walmart purchases, but on dining and travel as well, which is rare for a store card. You can also redeem your rewards earned with the card on more than just Walmart purchases, including statement credits.

If you’re interested in a store credit card, compare it carefully against other top-performing rewards cards on the market. With proper research, you may find a store card that fits your needs. But most consumers will be better served by a general rewards card during the holidays and beyond.

Good store cards for the holidays

Here are a few of our recommended picks for holiday store cards.

CardRewardsBonusAnnual feeOpen or closed loopWhy is it good?
Amazon Prime Rewards Visa Signature Card
  • 5% back on Amazon and Whole Foods purchases
  • 2% back at restaurants, gas stations and drug stores
  • 1% back on everything else
$100 gift card when you become a card memberNone (though you must be a Prime member to use the card)OpenThis card earns great rewards on Amazon purchases, which many consumers turn to for Black Friday and holiday sales
Costco Anywhere Visa
  • 4% at gas stations on up to $7,000 annually (then 1%)
  • 3% back on restaurants and travel
  • 2% back at Costco and 1% back on everything else
NoneNone (though you must be a Costco member to use the card)OpenThis card is a Gas and Costco powerhouse, perfect for bulk holiday shopping and holiday travel
Sam’s Club Mastercard
  • Up to 5% at Sam’s Club with Plus membership
  • 5% cash back on gas (on up to $6,000 annually, then 1%)
  • 3% on dining and 1% on all other purchases
Get a $30 statement credit when you open an account and make $30 in purchases in 30 daysNone (though you must be a Sam’s Club member to use the card)OpenThis card is neck and neck with the Costco card and is an equally excellent option if you prefer Sam’s Club
Walmart Rewards™ Mastercard®
  • 5% back on purchases made at Walmart.com and through Walmart Grocery Pickup and Delivery
  • 2% back on restaurants and travel
  • 2% back on in-store Walmart purchases after intro period
  • 1% back on everything else
Earn 5% back on in-store Walmart purchases made with Walmart Pay for the first 12 months after approval. After, earn 2% back on in-store purchasesNoneOpenThe card’s intro offer is a strong opportunity for rewards during the holidays, especially when you’re on the hunt for door-buster sales
Target REDcard™ Credit Card
  • 5% discount on in-store and online Target purchases
NoneNoneClosedOn top of the card’s big earning potential, you get several handy perks that are useful for the holidays, including free two-day shipping and a greater window for returns and exchanges
Gap Visa® Credit Card
  • 5x points on in-store or online purchases at Gap, Old Navy, Banana Republic and Athleta
  • Earn 1x points on all other purchases
Get free shipping and save 20% on your first Gap or Gap Factory purchase made within 30 days of account opening
Earn 3,000 bonus points for your first purchase made outside of Gap brands within 30 days of account opening
NoneOpenWhile the signup bonus isn’t the greatest, the Gap card is useful for the holidays as it earns additional points at all Gap brands, and grants Silver status after you earn 5,000 bonus points, which can boost your holiday earning potential

Alternatives to store cards for the holidays

If you’re looking for a great credit card pick for Black Friday and beyond, you have a few solid options that aren’t store credit cards:

Rotating category reward cards

Cards like the Chase Freedom Flex℠ or the U.S. Bank Cash+™ Visa Signature® Card are great picks because their largest earning categories change throughout the year.

Generally, these cards will include some strong holiday categories during the third and fourth quarters, such as Target REDcard™, Walmart or Amazon.

Intro APR credit cards

Sometimes you’re not looking for rewards on holiday purchases, but some breathing room to make your purchases and pay them off over time interest free as you head into the new year.

A card like the Blue Cash Everyday® Card from American Express offers such an offer, while providing solid rewards on top of that.

Flat-rate cashback cards

While flat-rate cashback cards tend to have lower earning rates than category cards, you can use them on any purchases you like and earn the same rate all year long.

This makes them a great option if you prefer to “fire-and-forget” your credit card earnings but still build a solid reward bounty. The Citi® Double Cash Card is a perennial favorite for this purpose and is useful all year round.

Compare rewards credit cards

General reward cards will remain the strongest option for a majority of consumers and can offer value all year round. Select your credit score below and click Show cards to start comparing reward cards side-by-side.

Name Product Welcome offer Rewards Annual fee Filter values
Chase Freedom Unlimited®
$200 after spending $500 in the first 3 months
5% cash back on travel purchased through Chase, 5% on Lyft, 3% on dining and drugstores and 1.5% on all other purchases
$0
This solid 1.5% cashback card gets even better with the addition of up to 5% back in categories like travel, drug stores and dining.
Citi® Double Cash Card
N/A
Up to 2% cash back on purchases (1% when you buy plus 1% as you pay)
$0
Earn up to 2% on every purchase with no annual fee. This is the highest flat-rate cashback card on the market.
Chase Freedom Flex℠
$200 after spending $500 in the first 3 months
5% back in rotating categories up to $1,500 combined each activated quarter (then 1%), 5% on travel purchased through Chase, 3% on dining and drugstores, and 1% on all other purchases
$0
Get up to 5% cashback in rotating and newly added everyday categories. The refreshed Freedom Flex card has lots of earning potential.
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