Is a Store Credit Card a Good Idea?  

Really, how much is an in-store discount worth?

Women paying with her store credit card

"Would you like to save 15 percent today by signing up for our store credit card?”
You pause. 15 percent? That’s a pretty good deal. You look at the items you’ve collected and wonder if they’re really worth full price when the offer is right there. Will you do it?

Maybe signing up for a store rewards program isn’t the most important decision you’ll ever make, but it deserves more than just a split-second thought. Make sure you know what you’re getting into, besides the 15 percent off today.

Types of Store Cards

There are two types of store cards:

  • Closed-loop store cards can only be used at specific retailers or retail chain families.
  • Open-loop store cards have a Visa, Mastercard or American Express logo along with the company logo, and can be used as a traditional credit card to make purchases anywhere the card is accepted.


The Good News

  • Credit Building: Store cards are a great starting place to build credit, especially if the store-branded cards cannot be used in other places besides the store. They are also available to those who have a hard time getting approved for a traditional line of credit.
  • Rewards: Member-exclusive events and discounts are useful saving perks.

The Bad News

  • Higher APR: Generally, these cards have a higher annual percentage rate (APR) than traditional lines of credit. Store credit cards commonly have APRs ranging from 25% to 30%. While they are convenient, you can expect to pay more in interest.
  • Impact on Credit Score: Signing up for a lot of cards at once may hurt your score. Opening up multiple lines of credit in a short period can have negative effects, especially if you take on too much debt. However, in the long run, if you maintain your payments, it can help you.

Important Considerations

Credit utilization is how much of your credit limit you use. For example, if your limit is $1,000 and you spend $200, your credit utilization is 20 percent. This makes up 30 percent of your credit score, so it’s important to keep it low.
While store cards and their discounts might be intriguing, it’s important to rely on your bank when it comes to credit. If you’re looking to build your credit score, your bank most likely has many different options to fit your needs!

The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its subsidiaries and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.