Credit Cards

This is the worst type of credit card for most consumers

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Do you have them in your wallet?

Key points

  • Store credit cards are often offered to consumers with the promise of a discount.
  • They usually have inferior rewards programs.
  • They also charge higher interest rates.

Credit cards sometimes get a bad rap, but the reality is that they can be a useful tool and most consumers should have at least a few cards in their wallet.

That’s because credit cards can help you build a good credit score, and they can also reward you with points, miles, or cash back just for buying things you have to buy anyway.

But while it’s a good idea to have at least one, and sometimes several, credit cards, there’s one type of card that’s generally not worth having: store credit cards.

What are store credit cards?

Store credit cards are credit cards that can only be used at a particular store. They are different from co-branded credit cards, which are cards issued by a major bank that has partnered with a company to offer a card bearing its name.

Co-branded cards can be used with any retailer or service provider, rather than just for branded purchases named on the card. These types of cards generally offer more rewards for shopping with the company that carries the card brand. But rewards often don’t have to be redeemed with that particular business, and points can still be earned by using the card elsewhere.

Store cards, on the other hand, can only be used at the store that issued them. And the rewards earned can also usually be redeemed only at that store.

Why are store credit cards the worst type of card?

Consumers are often offered store credit cards at the register when paying for a purchase. There is usually some incentive, like a 10% discount. But while this may sound appealing, most consumers should avoid opening store cards because there are numerous reasons why they aren’t as good as they say.

Store cards generally charge higher interest rates than cards offered by major banks. Since credit cards are already notorious for charging consumers a fortune in interest if they carry a balance, this is especially bad news for people who may not be able to pay their credit card bill in full when it’s due. .

Store cards are also pretty weak when it comes to rewards in most cases. The value of any rewards offered is usually well below standard cards issued by major banks, and since you usually only earn rewards when you shop at the store that issued the card, it can take forever to get enough rewards points to do anything. stuff. with.

When you earn rewards, you may also have little choice about what to do with them. It’s common that you need to redeem them with additional spending in the store, which means that instead of being rewarded with free money to use as you wish, you often end up spending more just to redeem your rewards. Store card rewards may also expire before you can use them.

If you don’t want an expensive card with a lesser rewards program that you can only use in a few places, you should definitely avoid store cards. There are plenty of better credit card options to consider instead.

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