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Photo by Getty Images/Illustration by Bankrate November 09, 2022 Ana Staples is a reporter for Bankrate and an expert on all things credit basics and personal finance for the younger generation. Liz Bingler is an Associate Editor for CreditCards.com and Bankrate, where she focuses on product news and reviews. As an editor, her goal is to produce content that will help people to make informed financial decisions. Bankrate logo The Bankrate promise
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. This post was originally published on Aug. 25, 2021. A couple of months ago, my friend and I went shopping and found ourselves at a Sephora store. After some browsing, she went to check out and came back with the fresh Sephora Visa Credit Card*. “Oh no, why did you do that?” was my reaction. My friend explained that she’d received a one-time discount and a pouch of free products. She couldn’t understand my exasperation. Like most credit card nerds, I frown upon . The APRs are high, the rewards are limited and the credit limits are low. But I can also admit that people’s credit situations and spending patterns are unique, and in some cases, a store credit card can make sense. But ? Next time you’re at checkout and a salesperson is pitching you a store card, ask yourself the following questions before you sign up. How often do you shop at the store
If my friend told me she signed up for the Sephora credit card because she shops there all the time and wants 4 percent back on her Sephora purchases, I might have understood. If you’re a loyal customer at a store chain, it may make sense for you to sign up for that chain’s credit card. Doing so could bring significant discounts or attractive earning rates, as well as other benefits associated with the store. However, it’s worth noting that, even if you frequently shop at a store, its store credit card still might not be the best option for you. See if you can find a general that could offer you the same rewards rate at that store and beyond. Could a general credit card serve the same purpose
This leads us to the next question — could a general credit card offer a better deal? For example, as a bookworm who spends at bookstores almost compulsively, I’ve been looking for a credit card that would reward me for book purchases. For a while, I’ve been considering the *, which earns 5 percent back on Barnes & Noble purchases. I love Barnes & Noble, and that’s not a bad offer at all. But when I was doing my research, I found the Affinity Cash Rewards Visa Signature*, a general credit card from Affinity Credit Union that earns 5 percent cash back at bookstores and Amazon, on top of competitive rewards in a few other categories. I’m now a happy cardmember. However, such perfect alternatives aren’t always possible. For instance, say you do all your shopping at a superstore like Target or Walmart. Many credit cards specifically exclude these stores when it comes to earning rewards. Luckily, they both have their own credit card products to offer. With the Target RedCard*, you can get a 5 percent discount on all eligible Target purchases. The offers 5 percent cash back at Walmart.com (including delivery and pickup) and 2 percent cash back at Walmart stores and fuel stations, among other rewards. Additionally, as a welcome offer, you’ll earn 5 percent cash back in Walmart stores for the first 12 months if you use the card with . These two cards offer rather appealing ongoing rewards for superstore lovers, especially considering superstore rewards are uncommon with general credit cards. Is it a closed-loop or open-loop card
You’ve done your research and you’ve concluded that a retail credit card is the best choice for earning rewards at your favorite store. But before you apply, there’s another aspect to consider: Is this card a closed-loop card or an open-loop card? To put it simply, you can only use at the store they’re associated with, while open-loop credit cards can be used anywhere — just like general credit cards. For example, the Target RedCard is a good deal for Target lovers, but it can only be used for purchases at Target (unless you’re targeted for the open-loop version, the Target Mastercard*). The Capital One Walmart Rewards card, however, is an open-loop card, which means you can use it anywhere Mastercard is accepted. You’ll even earn rewards on other types of purchases, including 2 percent cash back at restaurants and on travel and 1 percent back on everything else. However, some stores offer multiple credit cards, including both open-loop and closed-loop versions. For example, , which are issued by Chase: the * and the Amazon Rewards Visa Signature Card*. Amazon also has like the Amazon Store Card* and the *. These two cards are issued by Synchrony Bank, a popular issuer of store cards, and they can only be used on Amazon. Without a doubt, open-loop credit cards offer much more flexibility and, in many cases, . They may also come with better card benefits. Still, closed-loop cards can make sense in some cases — especially if . What s your credit score
Retail credit cards tend to be more lenient when it comes to requirements. However, as you may have already realized, not all retail credit cards are created equal. This applies to their , too. For instance, Chase issues the open-loop Amazon credit cards. This issuer is known to be stricter with approvals, so it may be harder to qualify for one of its Amazon cards. Plus, there’s the unofficial to consider, which means Chase may not approve you for a card if you’ve opened five or more cards in the last 24 months. Fortunately, qualifying for the Amazon Store Card might be easier. Closed-loop retail cards generally have lower credit requirements, which makes them a good option for those who are new to credit or have lower scores. Additionally, note that, if you don’t qualify for the store card you’ve applied for, some issuers may consider you for an alternate version of the card with lower score requirements. Take the Capital One Walmart Rewards card: It recommends that applicants have a to , but if you don’t qualify for the card, you may be automatically considered for the closed-loop Walmart Rewards Card*. Before you apply for a retail credit card, it’s a good idea to so you have a better idea of what you’re . Do you need to build credit
If your credit score could use some work, a retail credit card can help you just like any other type of credit card. But make sure you use the card responsibly. For instance, you should keep your under 30 percent and make all your bill payments on time and in full. Remember that a store credit card is rarely the only option for building credit. There are also general rewards credit cards with more relaxed credit score requirements, including credit cards for , and . What s the interest rate
Store credit cards are notoriously expensive when it comes to . This might not matter as much if you in full each month, which is the best practice for both your credit and your wallet. However, if you’re planning a that will take a few months to pay off or if you simply know that you have a habit of carrying a balance, choosing a retail card with a is not the best idea. The bottom line
I’m not saying a store credit card is always the worst idea. I’m only saying there’s a lot to consider before applying, even if you regularly shop at the store in question. So, next time the cashier asks you if you’d like to apply for a retail credit card, resist the pressure to say yes. If you’re interested, do your research first and make sure that the card you’re considering is the — just as you should do before applying for any card. *All information about the Sephora Visa Credit Card, Barnes & Noble Mastercard, Affinity Cash Rewards Visa Signature, Target RedCard, Target Mastercard, Amazon Prime Rewards Visa Signature Card, Amazon Rewards Visa Signature Card, Amazon Store Card, Amazon Secured Card and Walmart Rewards Card has been collected independently by Bankrate and has not been reviewed or approved by the issuer. SHARE: Ana Staples is a reporter for Bankrate and an expert on all things credit basics and personal finance for the younger generation. Liz Bingler is an Associate Editor for CreditCards.com and Bankrate, where she focuses on product news and reviews. As an editor, her goal is to produce content that will help people to make informed financial decisions. Related Articles