Exclusive perks can make retail store credit cards a good deal
Bank cards are better for everyday use, but if you love a specific brand, it may be worthwhile
Ask a question.
Dear Cashing In,
I’m thinking about getting a new credit card or two. From a rewards perspective, when does it make sense to have a store’s credit card as opposed to one from a bank? – Vicki
If you have been researching this topic, you know that you have a lot of choices in credit cards. People with excellent credit can have their pick of just about any publicly available card on the market.
In making that choice, one of the main factors you will want to consider is what kind of rewards you like to receive. If you are looking solely at the best value, then you will want to examine many of the travel reward cards available from the big banks. In October 2016, CreditCards.com conducted a survey of the credit cards with the best sign-up bonuses. The survey found that six cards offer $1,000 or more in rewards. All six are travel reward cards.
Other people are not as interested in travel rewards and instead prefer cash back, merchandise or unique experiences as their rewards. For example, with certain cards, you could bid on throwing out the first pitch before the World Series, mingle with players before a game or score hard-to-get tickets to the American Music Awards and after-party. Those are a lot more interesting and memorable than, say, receiving a statement credit of $27.19.
It is the same with store cards. If you enjoy receiving rewards from stores where you shop frequently, then having a retailer’s credit card can make sense for you.
Remember that just like any other card, when you apply for a store card, your credit will be pulled, and any failure to pay could show up on your credit report. Generally, there are a couple different kinds of store cards: There are cards you can use only at that store, and there are cards that have a Visa or MasterCard logo that can be used just about anywhere.
For instance, say you shop a lot at Nordstrom. It might be worth it for you to examine the Nordstrom no-annual-fee card. It earns you Nordstrom coupons worth 2 percent back on your Nordstrom spending (1 percent elsewhere). But it also gets you perks such as free alterations, early entry to certain sales and a “private holiday shopping party.”
Now, those benefits mean little to me – I’ve hardly set foot in a Nordstrom – but they could be valuable to Nordstrom diehards.
Many major retail chains offer credit cards, including Walmart, Costco, Kroger, The Home Depot, Target, Amazon, Lowe’s and Best Buy. So there is something for everybody. If there is a particular store you like and frequent, you might see if one is available and check out the benefits.
Just remember that as a baseline, there are cash-back credit cards out there that offer 2 percent back on all purchases. In some cases, you could use a card like that at these retailers and come out financially just as well or better than if you use a store’s card – though you might miss out on perks that only the retailers themselves can provide.
Not all store cards are created equal – some offer 5 percent off every day, while others might have more meager rewards that are a certain percent off on first use, plus occasional coupons.
Read the details, and ensure that you will use the card enough to have it make sense for you.
See related: 4 reasons to say ‘no’ to a store card offer
Meet CreditCards.com's reader Q&A experts
Does a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.
- Is the new American Express Gold Card worth it? – American Express has launched an updated version of its Gold Card that offers bonus points on dining and can even be ordered in rose gold. Is it worth it? ...
- Should I split the cost of a pricey rewards credit card with a relative? – Sharing the cost of a pricey high-end rewards credit card with an authorized user can make sense, but only if you trust their financial habits ...
- Charging taxes to earn rewards? You can, but do the math first – Paying taxes with a credit card qualify as a purchase, which means you'll earn rewards. However, the fees you'll have to pay will most likely wipe out any value on those rewards. Do the math first ...