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The pros and cons of retail credit cards

This holiday season, you might be tempted to apply for a store credit card. There are some good sides to these cards — they typically offer rewards and discounts. However, just like opening any credit card, you should think before you do it. Here are the pros and cons of store credit cards.


Rewards. Most store credit cards offer rewards and discounts tied to the amount you spend. The more you spend, the more reward points you stockpile. Some retailers even offer higher reward points on certain days, like those close to the holidays.

Save on Shipping. Many retail cards offer free shipping. While that might not seem like much, it does add up if you shop regularly at a specific store.

Easy Qualification. Many store credit cards have a lower qualification threshold than other credit cards. That means you could have a not-so-great credit score and still land the card.


High Interest. The average store credit card has a higher interest rate than other credit cards. Interest rates for retail credit cards hover around 28 percent. Meanwhile, other credit cards hover around 18 percent. That’s a big difference.

Low Limit. Your credit limit on a store retail card is likely to be low. That means when you use the card, your credit utilization will soar. That’s likely to hurt your credit score.

Deferred Interest. Some retail cards offer a payment plan with little to no interest. That’s great, as long as they also don’t come with deferred interest. If the card does come with deferred interest and you don’t pay it off on time, you’ll end up having to pay all that interest that you initially weren’t paying.


Do One Thing: Think twice before opening a retail credit card. There might be some perks, but usually, they are not worth it.

Chris O'Shea

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