What to consider before applying for a store credit card


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Before you scoop up a Walmart or Kohl’s Credit Card this holiday shopping season, 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.

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

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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 annual percentage rate (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. (Note: Terms are subject to change.) 

Citi Double Cash Card

  • APR: 13.99% to 23.99% variable
  • Annual fee: $0
  • Intro APR: 0% intro on balance transfers for 18 months, reverting to 13.99% to 23.99% variable
  • Balance transfer capabilities: Yes
  • Network: Mastercard
  • Rewards: 2% cash back on all purchases (1% when you buy and 1% when you pay)
  • Signup bonus: None

Gamestop Credit Card

  • APR: 26.99% variable
  • Annual fee: $0
  • Intro APR: None
  • Balance transfer capabilities: None
  • Network: N/A
  • Rewards: 5,000 points per $250, or 2% cash back at Gamestop
  • Signup bonus: 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)

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Comparing the cards

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. 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.

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Many store cards 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. With a standard rewards card, points or cash back you earn can be used to further fund your holiday spending at other retailers.

Perhaps the biggest drawback 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.

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Store cards 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.

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Are there 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.

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

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Amazon Prime Rewards Visa Signature Card

Rewards: 5% back on Amazon and Whole Foods purchases; 2% back at restaurants, gas stations and drug stores; 1% back on everything else

Bonus: $100 gift card when you become a card member

Annual fee: None (though you must be a Prime member to use the card)

Open or closed loop: Open

Why is it good? This card earns great rewards on Amazon purchases, which many consumers turn to for holiday sales.

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Walmart Rewards Mastercard

Rewards: 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

Bonus: 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 purchases.

Annual fee: None

Open or closed loop: Open

Why is it good? The card’s intro offer is a strong opportunity for rewards during the holidays, especially when you’re on the hunt for doorbuster sales.

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Target REDcard Credit Card

Rewards: 5% discount on in-store and online Target purchases

Bonus: None

Annual fee: None

Open or closed loop: Closed

Why is it good? On 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.

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Gap Visa Credit Card

Rewards: 5x points on in-store or online purchases at Gap, Old Navy, Banana Republic and Athleta; Earn 1x points on all other purchases.

Bonus: 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.

Annual fee: None

Open or closed loop: Open

Why is it good? While 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.

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Alternatives to store cards for the holidays

If you’re looking for a great credit card pick for the holidays and beyond, you have a few solid options that aren’t store credit cards. 

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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.

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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.

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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.

This article originally appeared on Finder.com and was syndicated by MediaFeed.org.

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