If you noticed an uptick in credit card offers from your favorite retailers late last year, you’re likely not alone. That’s because stores may use peak buying seasons, such as the holidays, to market their store credit cards to customers by offering incentives like one-time discounts on your purchase.

Sounds like a great deal, right? Perhaps, but opening a store credit card is different from opening a personal credit card. If you’re tempted to sign up for one, it’s important to know how much interest you may be paying, the rewards you’ll be granted and how store cards or retail credit cards affect your credit score.

Interest Rates and Rewards

When you consider applying for a store credit card, you may not be thinking about how much the card could end up costing you in interest rates.

That means that while you may enjoy a lucrative sign-up bonus — a one-time discount on a purchase — the high APR may wipe out those savings if you don’t pay your balance in full each month. If you plan on always paying your store credit card bill in full and on time each month, APR may not be a factor in your decision, but if you cannot always pay your full amount pay attention to the interest rates before applying.

While some store credit cards may provide a certain percentage off on an initial purchase, others may provide rewards or even points for each purchase. It is smart to read the fine print on these rewards and offers as they could have limitations you may be unaware of such as expiration of rewards and a cap on rewards.

Depending on your spending habits, a better option may be cash back credit cards that reward you for each purchase. And, if you do opt for a store credit card, make sure you can take advantage of the rewards it offers.

Store-branded credit cards charge users an average interest rate of 23.84%, well above the national average credit card interest rate of 15.22%

Impact on Credit Score

Your credit score relies on a number of factors, one of them being the number of inquiries lenders make as to the quality of your credit. Applying for a number of credit cards in a relatively short time frame may signal that you are a credit risk. This is especially important if you’re in the market for a mortgage or auto loan, since each credit inquiry could negatively impact your credit score.

What’s more, store cards may come with a low credit limit. This means that if you come close to maxing out your card each month, you could have a high balance relative to your total available credit, another factor (called the credit utilization ratio) that can lower your credit score.


If you’re used to paying for everything from gas to groceries with your credit card, you may be in for a surprise if you sign up for a store credit card. That’s because many of these cards are not as widely accepted as a regular card. If you don’t use your store card regularly, this can result in overlooked bills, or a failure to look for errors in your statement if you are not in the habit of reviewing your charges monthly.

As with any credit card, a store card can be beneficial if the rewards and perks outweigh the costs. But don’t let opting for a store credit card be another impulse buy. The better informed you are, the better credit decision you can make.

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