Credit Cards

Why You Should Probably Decline Store Credit Card Offers At Checkout

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Is a store credit card the right choice for you? To find out.

Key points

  • Store credit cards can be tempting if you’re loyal to a store or brand.
  • However, store credit cards often have minimal benefits and few rewards, and rewards programs aren’t flexible.
  • Find out some of the drawbacks of store credit cards.

How often have you been asked if you want to get a store credit card while you’re in line to check out? Retail staff are trained to ask this question, so it has become a regular part of the checkout process. If you’re asked this question, you should think before you agree to apply because a store credit card may not be the best card option. Read on to find out what you need to know about store credit cards.

The difference between store cards and regular cards

Many of your favorite retailers promote store-branded cards. These cards are widely marketed as a way for shoppers to earn rewards while shopping at their favorite stores.

However, there are notable differences between store cards and regular credit cards.

  • Many store credit cards are closed-loop cards that can only be used with a specific retailer or other partner brands. If you get a closed-loop retail credit card, you also can’t use that card to pay for gas or dinner.
  • Most store cards have minimal redemption options. If you want to choose how you redeem your rewards, a store credit card probably isn’t for you.

These are the two main reasons why it might not be the best idea to sign up for a store credit card. Here are some other reasons why you might want to decline a store credit card offer.

Store cards earn minimal rewards

Store credit cards typically earn minimal rewards. Even if you spend a lot of money with your card, the rewards rate on the card may not make the rewards worth it. You may end up spending a lot and not earning much.

Other rewards cards may have higher reward earning rates; Plus, most rewards cards allow you to earn rewards in multiple spending categories.

Low credit limits

Store cards often have low credit limits. Your credit limit is how much you can load on your card.

Many factors make up your credit score. The amount of your available credit you use or your credit utilization is an important factor. Your credit utilization accounts for 30% of your FICO® Score. Because of this, it is better to have a lower credit utilization.

If you have a low credit limit on a store card, it will be easier to use more of your available credit. That could negatively affect your credit score.

Store credit card discounts are often one-time offers

Many retailers promote an in-store discount as a welcome offer for new cardholders. However, most store credit cards only offer a one-time in-store discount.

So while you can save 10% on your first purchase when you sign up for the store-brand card, chances are you won’t continue to get a discount (or as much of a discount) on future purchases. Keep this in mind when considering a store card.

Few or no card benefits

Unlike other rewards credit cards, a store credit card won’t have many features or benefits. You may not have any benefits besides getting a low rewards rate on store spending.

Other rewards cards may include benefits such as purchase protection, extended warranty protection, and trip cancellation insurance. A card with more benefits can provide more value.

Interest rates above average

Many store cards also have higher-than-average interest rates. Interest charges can get expensive if you don’t pay your card balance in full each month. You may be able to get a different credit card with a lower interest rate.

Paying interest charges is never a good idea. If you plan to carry a balance on the card to give yourself time to pay for a larger purchase, you can apply for a 0% APR credit card.

You should take your time reviewing credit card options

The worst time to sign up for a credit card is when you’re about to pay for your purchase and walk out the door.

You want to make sure you’re making the right decision for your financial situation and goals. It’s best to consider card options and carefully review card details first. It’s almost impossible to do that at the checkout line.

Store credit cards are not the only option

Are store credit cards worth it? For some shoppers, it may make sense to get a store card from a favorite retailer. But they are not the right card for everyone.

Don’t rush into getting a store credit card, and don’t feel pressured to say yes when asked if you want to apply for one.

There are many other credit cards that offer more flexible and varied rewards. Check out our list of the best rewards credit cards if you’re ready to get a new credit card.

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