THIS PAGE MAY CONTAIN AFFILIATE LINKS. MEANING WE RECEIVE COMMISSIONS FOR PURCHASES MADE THROUGH THOSE LINKS, AT NO COST TO YOU. PLEASE READ OUR DISCLOSURE FOR MORE INFO.
Credit Shout may collect a share of sales or other compensation from the links on this page.
It seems like everywhere we turn, we’re inundated with new offers for store credit cards; everything from Walmart, to Sears, to JC Penney. Even American Eagle has their own credit card. While it may be tempting to snap up another one of these cards at the cash register when the cashier offers you 30% off your purchase, it’s in your best interest to limit the number of store cards you carry in your wallet.
Since you can’t have them all, it’s best to choose carefully. The best choice for each customer will be different, since shopping habits vary widely, but it’s important to consider which stores you spend the most money at, while also comparing the discounts that each offers. Below is a rundown of a few of 2011’s most popular store cards.
If you shop at Kohl’s a lot, you may already own a Kohl’s Charge Card. If you become an MVC (Most Valued Customer), you get members-only discounts such as 15-30% off your entire purchase mailed to you every month or so, which are only valid if you use your Kohl’s Charge Card. This is a great discount for Kohl’s shoppers. The interest rate is pretty high, though: 21.9%.
With the Sears Credit Card, you get monthly coupons and special member-only savings. Sears also advertises that cardmembers have access to “special financing offers.” This can be useful if you buy a lot of things at Sears. If you don’t, any rewards card will do. The current APR is 25.24%, which is extremely high compared to the average credit card, and fairly high for a store card.
Target’s REDcard offers 5% savings on Target purchases. You can get either the credit or debit card version. The debit card is pretty cool, as it draws directly from your existing checking account. This is the card I would recommend, since it doesn’t tempt you to spend beyond your means. The APR is currently 22.9%.
Amazon has a couple of different cards. The Amazon Store Card seems to mainly be for financing large purchases on Amazon, but their Amazon.com Rewards Visa is good for everyday use. Unlike many store cards, you can use it other places than just Amazon. You get three rewards points for purchases on Amazon.com, two points for gas, restaurants, and drug stores, and one point for everything else. The interest rate for the Signature card, at 13.24%, is quite reasonable for a store card.
Should I Get a Store Card?
As you can see, the interest rates for these store cards are rather high. If you want to pick up a store credit card for your favorite store in order to get extra savings, feel free to do so. But if you only shop at Target a couple times a year, it’s better to say no to the credit card offer, as much as the cashier tries to convince you it’ll save you hundreds of dollars.
If you already have a store card or choose to sign up for one, keep the number low. No more than two or three is a good rule of thumb, although there’s no magic number. Also, don’t open several new cards at once. It may save you a lot of money on your Christmas shopping, but it will drop your credit score, making it harder to get credit in the future. (Each credit pull only drops your score around 5 or 10 points, but having too much new credit can affect your score, too.) If it drops too much, your current cards may get a rate hike. This could also affect your chances of being approved for a mortgage or other loan.
The bottom line is, store cards aren’t kryptonite, but they can cost you a lot of money if you’re not careful. It’s okay to own a couple, and may even save you some money as long as you don’t go overboard. The best store cards are the ones that offer you some sort of discount to use your card. After using it, pay off your balance promptly so you don’t end up paying 25% interest or some other ridiculous amount.