Not only is it possible to transfer your store credit card balance to a new credit card, it’s usually a smart move. Just be sure you’re doing so to tackle debt, not free up your store card’s credit limit.
Store credit cards can be tempting for savings-minded shoppers, promising big discounts, loyalty rewards and a chance to finance large purchases over time. But since store cards tend to carry extremely high APRs, you can easily get into trouble if you run up a balance you can’t pay back.
If you’re struggling to pay off your store credit card, rest assured. The average store credit card is no different from a traditional credit card, and if you can qualify, a balance transfer credit card is a viable option.
Can you transfer a store card balance to a credit card?
The short answer is yes. Not only is it possible to transfer your store credit card balance to a new credit card, but it’s also usually a smart move.
Assuming you can qualify, doing a balance transfer from your store card should help you save on interest, reel in frivolous spending and enjoy more flexibility in earning and redeeming rewards.
Pros of transferring a store card balance
If you’re debating whether you should apply for a new card and transfer your store credit card balance, here are a few reasons why it might be a good idea.
Store card APRs tend to be very high
Store credit cards are notorious for their gargantuan APRs. What’s worse, many store cards charge all cardholders the same variable APR, regardless of their credit history.
A CreditCards.com retail store card survey found the average store card APR was around 25.90% for a store-only card and around 22% for a co-branded store card, so if you’re carrying a large balance, you’re likely facing a steep uphill battle in paying off debt.
For example, the Best Buy store card – the My Best Buy® Visa® card from Citi – and the Macy’s American Express card charge a high-end variable APR of 25.24%, and the store-only JCPenney credit card charges all cardholders a variable APR of 26.99%.
By transferring your store card balance to a new card − especially one that offers a low or 0% intro APR on balance transfers − you can hit pause on mounting interest charges and work on paying off your debt.
To see just how much you could save, let’s take a look at a couple of examples. Here’s how things would shake out if you were to do a balance transfer from an Amazon Prime Store Card to a new card that offers a 0% intro APR for 18 months on balance transfers:
Doing a balance transfer to pay off an Amazon Prime Store Card balance during a 0% intro APR period
|Payoff plan (new card with a 0% intro APR for 18 months)||Cost of balance transfer (card with a 3% balance transfer fee)||Savings versus Amazon Prime Store Card (with a 25.99% APR)|
|$500 balance with $30 monthly payment||$15 balance transfer fee||$128 in interest|
|$1,500 balance with $85 monthly payment||$45 balance transfer fee||$411 in interest|
|$3,000 balance with $172 monthly payment||$90 balance transfer fee||$809 in interest|
As you can see, transferring your store card balance could not only help you save on interest, but also give you a chance to pay off or substantially reduce the amount you owe.
See related: Credit card balance transfer calculator
A new card may offer more long-term value
Store cards tend to be “closed loop” cards, which means they can only be used at a single store or family of stores. This could severely limit their long-term value, since you may only be eligible to earn rewards in a very narrow category of spending, like furniture or sporting goods purchases. Additionally, any rewards you do earn can only be used at the store itself.
While there are some “open loop” store-branded cards that have a much wider reach (they may be accepted anywhere Visa or Mastercard are accepted, for example), even these cards tend to fall short, since in most cases you’ll still have to redeem your rewards at the store.
Even if your current focus is on paying down debt and avoiding interest – not scoring credit card rewards – it’s important to keep long-term value in mind. Transferring your balance to a more general-purpose credit card will almost always lead to greater overall savings and more flexibility.
You can avoid the deferred interest trap
Many stores offer special financing on large purchases when you sign up for their store-branded credit card and being able to buy a big-ticket item and pay it off over time is one of the main attractions of store cards.
Unfortunately, most of these offers use a risky deferred interest model, which could end up costing you a ton on the back end if you’re not careful. With deferred interest, if you don’t manage to pay off the entire balance of your purchase by the end of the promotional period, you’ll be charged interest going all the way back to the date of purchase.
If you have a deferred interest deadline coming up and worry you may not be able to pay off your balance in time, a balance transfer could be exactly what you need to avoid accrued interest charges and a high ongoing interest rate. To ensure your balance transfer goes through before the end of a promotional period, it’s critical that you get the process started early since you won’t know in advance exactly how long your balance transfer will take.
It could help you control spending
The discounts and rewards offered by a store card may encourage you to shop at that store more frequently – maybe more than you should. Plus, since you’ll often have to continue shopping at a given store to make use of the rewards you’ve earned, you may end up buying things you don’t really need or paying extra on items not fully covered by rewards.
Cons of transferring a store card balance
While transferring your balance from a high-interest store card to a new card with a lower ongoing APR or a 0% intro APR is usually a wise decision, there are a few potential downsides to keep in mind.
You may have to use your store card to claim special perks
One of the major selling points of department store credit cards is the exclusive, store-specific discounts and perks they offer, ranging from birthday bonuses and one-time discounts to free shipping.
The Nordstrom Visa Signature card, for example, gives cardholders free basic clothing alterations or reimbursements on alterations (depending on your loyalty program status), and the Target REDcard comes with free shipping and a longer return period for both in-store and online purchases.
The catch, of course, is you’ll have to use your store card to take advantage of these benefits. If you’re planning to transfer your balance and then stop using your store card, you’ll probably have to give up these perks.
Your new card may not offer rewards at your favorite store
In some cases, one of the only ways to earn consistent cash back bonuses or points at a given store is to use a store credit card. Hypermarkets like Walmart, Target and Costco, though popular, are hard to classify. Are they grocery stores? Department stores?
As a result, they’re often not included in most rewards cards’ bonus categories. That said, you can always hang onto your store card and use it when needed (after you’ve gotten a handle on your spending habits, of course).
A new card could spark overspending, too
Just as a credit card designed to reward store loyalty may lead to irresponsible spending habits, a new credit card – especially one that offers a 0% intro APR on new purchases – could spell trouble if you struggle with overspending.
You may want to avoid the temptation of a new card altogether and instead focus on paying off your existing balance via a DIY payment plan or some other form of debt consolidation.
Additionally, transferring your balance will free up your store card’s credit limit, which could simply lead you to rack up another burdensome balance.
Other things to keep in mind before transferring your balance
Transferring your store card balance should be a fairly straightforward process and is likely to save you money in both the short and long term, but there are a few caveats to keep in mind before you apply:
- You may not qualify for a balance transfer card. Since store cards are generally easier to qualify for, many people sign up for them hoping to build or rebuild credit. But you’ll need good to excellent credit to take advantage of the best balance transfer offers. Instead of trying to do a balance transfer with bad credit, you may be better off focusing on improving your score through on-time payments and low credit utilization.
- You may not be able to transfer your full balance to a single card. Even if you’re approved for a new balance transfer card, the balance you want to transfer may exceed your new card’s credit limit.
- You may have even run up balances on multiple high-interest cards. In either case, you’ll have to decide if you want to transfer a portion, apply for multiple balance transfers (and pay multiple balance transfer fees) or consider a debt consolidation loan or another payment plan.
- You won’t be able to transfer your balance to a new card with the same issuer. Most issuers, including Capital One, Citi and American Express, do not allow you to transfer a balance between two of their cards.
- Your new ongoing APR may not be much better. If you don’t manage to pay off your transferred balance during your new card’s 0% intro APR period, you may be left with an ongoing APR that’s just as high as the one offered by your store card, so be sure you have a payoff plan in place before you apply.
- Your credit score may suffer if you close the store card. If you don’t have much available credit, closing your store card could increase your overall credit utilization and lower your credit score. Assuming your store card charges no annual fee (few do), you’re best off leaving the account open. You may also want to use the card for something small at least once every few months to keep it from being closed by the issuer due to inactivity.
While store credit cards can offer unique perks, rewards and discounts at your favorite store, their sky-high APRs make it hard to justify carrying a balance long-term. Luckily, a balance transfer is possible, and if you’re struggling to pay off a high-interest store credit card, it’s probably wise.