Are Store Credit Cards Worth It? Pros and Cons of Store Credit Cards


“Would you like to get a 20% discount on your purchase today with a store credit card?”

It’s a question you’re likely to hear at many a checkout counter every Black Friday, that infamous shopping day that follows Thanksgiving. (More and more, though, Black Friday is a multiweek affair.)

At some stores, it’s a question you’ll hear each and every time you shop, regardless of time of year.

What’s the right way to react to this all-too-common scenario?

This post explains the basics of store credit cards, looks at the impact they can have on your credit, and shows you how they compare to regular credit cards offered by banks, credit unions, and online lenders.

Most importantly, you’ll get the data you need to decide if that 20% discount is worth it.

What are Store Credit Cards?

Store-branded credit cards are a revolving line of credit that can typically only be used at the store which issued it. Examples of store credit cards include the Target RedCard and the Macy’s Star Rewards Card.

Some store credit cards can be used at an entire family of stores. That’s the case with the Gap Good Rewards card. You can use it at Gap, but you can also use it at sister stores Old Navy, Athleta, and Banana Republic.

How Do Store Credit Cards Work?

Store credit cards work a lot like regular credit cards. When you swipe at the checkout, you won’t owe any money in the moment. But that money will be due at the end of your statement cycle. If you pay off your balance in full, you won’t owe any interest. If you don’t, though, store credit cards do typically charge higher-than-normal APRs.

While the best financial move is to pay off your store credit cards in full every month, at the very least you will want to pay the minimum due each statement cycle. If you don’t, you risk a late payment reporting to the credit bureaus , which can have a negative impact on your credit score.

Negative marks on your credit report can make it harder to secure…



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