Are Store-Branded Cards Better Than Best Credit Cards?

Credi Card

Whether you are actually in a physical store or on the internet version of a store, there is one thing you can almost guarantee: During checkout, you will be asked, “Do you have our store’s credit card?” If the answer is no, “Would you like to apply?” is going to be asked immediately. It’s a common way to drum up more business and to build loyalty to that store over the competition. You were likely going to make the purchase with a network card (Visa, MasterCard, American Express, etc.), or with a debit card, or some other card you already have. You listen to the pitch from this store. Are there any that are worth the signup and/or switch? Truth be told, not really. Of course, you are probably tempted by an offer of a very large discount on the purchase you are about to make, and perhaps more steep discounts in the beginning of the relationship. But overall, the store card is less beneficial than regular credit cards. Let’s look at 5 reasons why.

5. Interest rates

Interest Rates

To start with, many issuers of the major network cards will usually offer a special incentive at the beginning, such as 0% interest for 6-18 months. These incentives almost never come in the store card offer. Regular interest rates for store cards are almost always higher. Retail store credit cards have an average APR of 24.99%, while general-purpose credit cards have an average rate of 16.15%, according to a 2017 survey from If you carry a balance from month to month, you will pay much more in interest and take much longer to pay the card off. You might get a deferred interest program, such as “make a $1,000 purchase and get 0% interest if the balance is paid in 6 months.” If you have a $1.00 balance at the end of the promotion period, your next statement will include ALL the interest that accrued during the promotion period.

4. Credit Limit

Credit Limit

Depending on your credit score and credit history, a general credit card could come with a credit limit in the thousands of dollars. Regardless of those factors, the store card you apply for is likely going to come with a $300-$500 credit limit. If this is a card from your favorite store, you could max the card out in a single day. Some store cards will increase your limit after some period of time and proper use of the card. This is equally or more likely with a general credit card.

3. Limited Use

Credit Cards

Would you try to buy tickets to the big game or theater performance with an American Eagle store card? Obviously not. You can only use the store card in one store or family of stores if they are not co-branded with a Visa, MasterCard or AMEX logo. There are co-branded store cards available, but the qualifications are more restrictive than the pure store card. The best store cards can be used at multiple stores (the stores that are all owned by the same corporation), but even that is extremely limited.

2. Reward Limits

Reward Limits

Store cards have more restrictive rewards, which are more difficult to earn and have limited redemption options. Obviously, you can only redeem rewards in that store, and often you must redeem rewards with an in-store purchase and you must be making a purchase with the store card (such as redeeming a $10 gift certificate can only be done while making at least a $20 purchase). Co-branded cards will offer rewards for all uses with higher rewards for use within the branded store, and a variety of redemption options. For example, major airlines like Delta and American have Visa or MasterCard cards where you can earn reward points on every purchase, but you can earn double, triple or even more rewards points when booking travel on that airline. Also, network cards often have cash-back options where you can get a check issued to you or have a credit given to your account to reduce your balance.

1. Credit Score Impact

Credit Score

General network cards, with their availability to be used anywhere and established connections with the credit reporting agencies, will impact your credit score more quickly and with higher impact than store cards. If you use the general card wisely, paying the balance in full each month and never coming close to the credit limit, you will see your credit score rise rapidly, and more credit will be made available to you. The impact is much lower with a store card. If you are a first-time credit user, or have badly-damaged credit that you are striving to repair, a store card is a good option to get a good credit history established. Otherwise, you will eventually need a network card to give your score a big boost.

There are other things that hamper the use of store cards, such as complicating your personal finances – for example, keeping track of 10 store cards is more difficult and time-consuming than two or three general-purpose cards – and while you may be offered a very steep discount on that first purchase or first month, this is a path to a more complicated financial life and offers much greater opportunity for mistakes and over-use.

Again, this is not to say that store cards are awful, and some great consumer force should sweep in and rid the world of them. If you have no credit history, or if you have had some bad times and need to repair your credit, store cards are a decent place to start. Also, if a particular store is your absolute favorite, you shop there frequently, and the in-store reward options are for things you can really use or things you really want, then that store’s card would be right for you. However, if you have options for credit, the general-purpose cards are going to be of greater benefit to you than the store cards.