What’s a Store Credit Card?

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credit card advice

CardRates.com Staff
By: CardRates.com Staff
Posted: May 11, 2015
Our personal finance experts dish out the most trusted credit card advice on the web, including juicy tips, tricks and secrets from inside the credit card industry.

Store credit cards are those uniquely branded pieces of plastic that are for use exclusively within an issuer’s chain of stores.

Examples include department stores like Target and Macy’s, but they don’t end there. Other retailers that have jumped on the store credit card bandwagon include warehouse stores like Costco, clothing stores like Gap and American Eagle, and even Apple.

How do they work?

A store credit card is primarily used by retailers to get you to spend your hard-earned dollars at their store rather than at a competitor’s.

They figure if you have their card in your wallet, you’re more likely to head in and do your shopping with them. In order to get that card into your wallet, they’re willing to offer you an incentive in the form of a discount.

It works like this

When you’re at the checkout counter and the store clerk asks if you want to save an additional 15 percent or so on your purchase today, what they’re really asking is, “Can we put our little piece of plastic in your wallet, please?”

In doing so, they hope to influence you to come back and use it time and again.

“A store card can be a good choice for

someone just starting to build credit.”

Is it worth it?

Whether or not it’s worth it to carry a store credit card depends on a number of factors.

First, they tend to have much higher interest rates – some as much as double that of a standard credit card. So if you carry a balance on your card, these likely aren’t right for you.

Second, the benefit of a big discount on your purchases typically only applies to your very first one.

Third, the card is only good for that store chain.

Finally, applying for the card means having a hard inquiry on your credit – too many of which can negatively impact your score.

Are they ever good?

A store card can be a good choice for someone just starting to build credit. Usually a store card has less stringent requirements for a strong credit history.

Also, if you plan to make a large purchase at a store, it may be worth applying for a card in order to get the discount. Just be sure to pay off the balance before you begin accumulating interest on it.

As with anything related to credit, it’s important to use common sense and good spending habits. If you’re looking to build your credit history and expand your available credit limit, a store credit card may work for you.

Just be sure to pay off the balance every month so you don’t get hit with a big interest charge that negates any discount you might have received.

Photo: blog.unibulmerchantservices.com