Should I apply for a store card this holiday shopping season?

If you're loyal to a specific store and plan not to carry a balance, it might be worth it – otherwise, look for a rewards card instead

Cashing In with Tony Mecia

Tony Mecia is a business journalist who writes for a number of trade and general-interest publications. Every week, he answers readers’ questions about credit card rewards programs in his “Cashing In” column.

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Should I apply for a retail store credit card this holiday shopping season?

Store cards might be easier to get than regular credit cards, but they also come with sky-high interest rates.

If you shop frequently with a specific store and plan not to carry a balance, the rewards offered by a store card might be worth applying for.

Otherwise, a traditional rewards credit card might offer better rewards – and a lower APR.

Expert Q&A

Check out all the answers from our credit card experts.

Dear Cashing In,

Every time I go to the department store at the mall, they ask me at check-out if I want to open a credit card. They say it will save me money. I’m kind of skeptical about opening a credit card at a store. Is it worth it? – Denise 

Dear Denise, 

In the next few weeks, as the holiday shopping season arrives, shoppers are going to be hearing a lot about opportunities to open cards.

Stores have trained their cashiers to offer store cards. You’ve probably heard the pitch. It usually goes something like this: “Would you like to open a card today and save 10 percent off today’s purchase?”

See related: 2018 Retail Store Card Survey: Beware 30 percent APRs, ‘special’ financing

Store credit cards are popular – and potentially expensive

Store cards are pretty popular. According to a 2017 Tsys survey, 56 percent of Americans have at least one store card. That means that more than half of shoppers have succumbed to the pitch that they heard at a register.

At the same time, as a recent survey found, retail cards’ interest rates have generally risen in line with Federal Reserve’s recent spate of rate hikes. The average median APR for retail cards is 25.64 percent. By comparison, the national average APR for regular rewards credit cards currently stands at 17.13 percent.

This means that carrying a balance on a retail store credit card can be potentially more expensive than doing so on a regular credit card.

Store cards versus regular cards

It is important to distinguish store cards from the more common credit and debit cards. Credit and debit cards, like the ones run on payment networks such as Visa, Mastercard and American Express, can be used virtually anywhere cards are accepted.

Store cards, on the other hand, can generally be used only at the stores that issue them. A Macy’s card, for instance, can be used only at Macy’s.

However, note that some stores also give you the option of applying for credit cards that are accepted elsewhere. Macy’s, for example, also offers an American Express card.

Here are some of the country’s biggest retail chains, along with the perks that come with their store cards:

  • Best Buy: 5 percent back in rewards on all purchases.
  • Gap: 20 percent off first purchase.
  • Home Depot: $25 off first purchase of up to $999; $100 off on first purchase of $1,000 or more.
  • JCPenney: 15 percent off first purchase.
  • Kohl’s: 35 percent off first purchase.
  • Macy’s: 20 percent off purchases the first two days, capped at $100.
  • Staples: $50 off first purchase of $150 or more, plus 5 percent back in rewards on all purchases.
  • Target: 5 percent off all purchases.
  • Walmart: $35 statement credit on $75 initial spend, plus 1 percent off future purchases

As you can see, the main benefits tend to be a deep initial discount on purchases, with perhaps some ongoing rewards or savings on future purchases.

Some store cards also allow you to finance large purchases. Others offer access to events such as special shopping days, additional coupons, and free shipping for online orders.


Tip: As the Federal Reserve keeps tightening its benchmark rate to head off inflation, credit card rates are expected to keep raising – and credit card holders who carry balances can, and should, take actions to minimize the cost, especially if your card comes with a high APR as it is the case with most store cards. If you're looking for ways to pay off – or at least down – your credit card debt, we're here to help. See our "Guide to rising credit card interest rates" to learn more.

Beware sky-high interest rates

Another encouraging part of these store cards is they tend not to have annual fees. Since you can almost always sign up for them on-site at the store, they are essentially free and easier to obtain than regular credit cards.

The main risk of opening and carrying a balance on a credit card, is their sky-high interest rates.

As 2018 survey found, many store-only cards combine risky deferred interest deals – typically a temporary low interest rate – with regular APRs hovering near 30 percent.

So, if you apply for a retail store credit card, make sure to pay it off in full before the regular interest rate kicks in if it comes with an intro offer, and do not carry a balance on the card. With APRs of nearly 30 percent, store card debt can snowball pretty quickly.

Store cards versus rewards cards

Compared with most reward credit cards, the rewards from store cards tend to be meager.

The top reward cards can be worth hundreds of dollars in credits and reward points. With the store cards, most people would be hard-pressed to earn rewards of more than $100.

However, if you are a regular shopper at a particular store, signing up for that store’s card can make some sense – particularly the ones with ongoing value.

For instance, Target’s card gets you 5 percent off all Target purchases – and free shipping on your purchases. If you spend a lot of money at Target that can be a big boost.

If you’re just a casual shopper at these chains, applying for a card probably isn’t worth it – and can prove expensive should you allow yourself to carry a balance on any of these cards.

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Updated: 12-19-2018