Are Store Credit Cards Worth the Hassle? See the Breakdown Here

These days almost every store you go to offers you a store credit card and it’s hard to understand if they’re worth it. You’ve only got so much space in your wallet and additionally, you don’t want to be using a separate credit card for each transaction you make.

Oftentimes these types of cards provide you with a chance to earn rewards while you use the cards at designated stores. Sometimes those introductory offers seem too good to pass up. But your credit score is important to keep in good standing and you can’t just go around willy-nilly trying out every card.

ADVERTISEMENT

So are store cards worth the hassle? Arm yourself with the full breakdown of store credit cards before your next visit to a checkout so you can make the right decision. Read on to learn everything you need to know.

photo credit;joinhoney.com

 

How Do Store Credit Cards Work?

Store credit cards are credit cards offered by a particular store in partnership with a credit provider. They typically come with rewards and incentives in the store to sign up and use the card to make purchases there.

ADVERTISEMENT

Store credit cards come in two forms, closed-loop and open-loop. And they all have their own set of advantages for having them.

Closed-Loop Store Credit Cards

Closed-loop cards are where you can only use the cards for purchases in the store from which the card is issued. In some rare cases, you can also use the card in stores that are owned by the same company.

Open-Loop Store Credit Cards

Open-loop cards can be used to make payments in different stores or with any merchants that accept credit cards. They usually have a network payment logo on them such as MasterCard and Visa.

ADVERTISEMENT

Pros of Store Credit Cards

  • You get a number of discounts from the stores that issue the cards.
  • You get to earn major rewards with the cards as well. For example, one you have the store credit card, you are automatically entered into their rewards program.
  • You can use the store credit cards to build credit. The stores tend to partner with major banks and other credit-issuing facilities to offer you the credit.

Cons of Store Credit Cards

  • Closed-loop cards cannot make purchases at other stores
  • The interest rate charged by the cards is usually extremely high
  • Store credit card rewards programs are typically low compared to non-store credit cards

Rewards System

The retail rewards systems that come with store credit cards is typically not robust enough to make the card worth having. These program are usually attached to the store alone, meaning you can’t get rewards on purchases made outside the store.

The rewards themselves come in the form of in-store gift cards and low prices. Typically, your rewards can also only be redeemed for purchases at that particular retailer.

Are Store Credit Cards Worth the Fees?

Store cards typically come with high interest rates and fees. The high interest rate can make it very difficult for you to pay off the balance on the card if you’re not careful about not incur interest charges. With these cards, it can be easy to fall behind on payments.

So, are they worth the fees? Yes and no. For example, if you use your card for grocery shopping, you can get a grocery store card and not feel the pinch. The number of discounts and rewards in the form of gift cards is worth the fees in the end.

But when you want to earn rewards elsewhere too, then the fees aren’t worth the card. Ultimately, whatever you decide, a new credit card should fit your existing lifestyle when you go to apply for any store card.

Image Source: bestbusinesscreditcards.ca

Conclusion

You must weigh your options before you apply for any card, especially for a store card. They have their own set of advantages and pitfalls. Do your research on the credit card that best fits your lifestyle.

Disclaimer: All credit products carry risk. Be aware of these risks by reading the associated terms and conditions.