You have probably been given a supermarket credit card at the checkout counter if you went shopping on a regular day. Retailers also offer significant incentives to push credit cards to their workers. 

With substantial discounts promised, the incentives provided to customers can sound lucrative. Store credit cards, however, can be hazardous. 


To design co-brand credit cards, you may spend a large part of your credit card career working with retailers. Here are the greatest dangers of saying yes this holiday season to the cashier.

Learn the Biggest Risks of Store Credit Cards
Image Source: Money Crashers

Overview: What’s a Store Credit Card?

A store credit card is a credit card that only operates with one retailer or a group of similar retailers. Store credit cards are known for having $0 annual fees and being open to individuals with 640+ credit scores, making them perfect for low-cost credit construction.

If you like to spend and shop, then you probably can’t even count the number of times you were given a credit card when checking out.  Sometimes it’s an enticing bid. Some stores promise gift cards, even enough to cover the entire order and then some, or a hefty discount just to sign up right there on the spot for their credit card. 


But without taking the time to read the fine print and weigh the effect it might have on your finances, it’s never a good idea to sign up for a new credit card. In particular, this is true of store credit cards, which bear various risks

With that in mind, along with some advice not to fall into any of these pits, here are some of the collected most widespread hazards of store credit cards.

Rewards-earning Power is Limited

Part of store credit cards’ attraction is that they typically allow consumers to save money in the future, whether by exclusive discounts or a loyalty point scheme. 

But even at that particular store, you may be compensated for shopping, but you may not win incentives anywhere else, and that’s a stark difference from other travel and cashback cards. 

For example, take the American Express Blue Cash PreferredĀ® Card: you can receive 6 percent cash back at grocery stores with the card (up to $6,000 a year in transactions, then 1 percent), 6 percent cash back on some U.S. streaming subscriptions, and 3 percent cash back on U.S. gas and transit, along with 1 percent cash back on all other purchases. 

Without being limited to a particular store or spending group, this is a vast selection of ways to win big rewards.

Heavy Interests

The more you spend, the harder each month will be to pay off your balance in full. Unfortunately, it is also much more costly to carry a balance on a retail card than to balance another credit card since store cards usually charge higher interest rates. 

According to the Federal Reserve, the national average interest rate for credit cards at the end of 2019 was 14.87 percent. But it’s normal to see prices in the 20 percent range and higher when you zero in on retail cards. 

Because of the usually high-interest rates, when you hold a balance, store cards can be much riskier than regular credit cards. 

But by paying off your balance on time and in full every month, you can stop paying interest. You should be able to stop holding a balance by staying within your budget.

No Shopping Protection

Although store credit cards have been built for shopping, they still do not measure up to other cards when it comes to shopping security. Issuers such as Capital One, Chase, and American Express provide consumers with substantial advantages. 

This includes price insurance that you can use to get reimbursed for the difference if an item’s price decreases after you purchase it; extended warranty protection that extends the warranty period on those items you buy; and purchase protection that can protect you recently bought it.

No Full Minimum Payment on Time

You can try to make the minimum payment by the due date, at least. Making a payment and then being hit with late fees and penalty APRs is one of the few things more irritating than paying interest on a high-interest credit card because you didn’t pay enough or you skipped the due date. 

Less-than-minimum fees and late payments are handled the same way by many store credit card issuers.

They Have Ways to Maximize Retail Purchases 

Popular travel and cash back credit cards do not appear to give retail spending incentives. For example, if you spend a lot of money on clothing, home decor, or electronics, you do not like the concept of receiving just 1 point per dollar or 1 percent cash back. 

Fortunately, there are many ways to make sure you get a much better return on your shopping spending, including without a credit card from the supermarket.

Learn the Biggest Risks of Store Credit Cards
Image Source: Credit Card Mojo


Store credit cards can help you create credit or get a discount at your favorite retailers on popular purchases, but they come with risks. 

These cards need to be used with eyes wide open, whether they pressure you into spending more than you intended or threaten you with high-interest charges. Whenever you shop, understanding these risks will help you make store credit cards work for you.