Watch Out for Those Store Cards: Here’s Why

A store card is a credit card associated with a particular chain of stores. As a result, such credit cards tend to have features that incentivize using them to buy products at said stores, with an excellent examples being discounts on such purchases. However, it is important to note that store cards are often less useful than comparable credit cards, meaning that interested individuals might want to consider searching elsewhere for their credit card of choice.

Why Is a Store Card a Bad Idea?

First, a store card tends to have a limited selection of features. For example, a rewards-oriented credit card might incentivize the credit card user to spend at a particular kind of business, with examples ranging from gas stations to grocery stores. In contrast, store cards are often limited to incentivizing spending at the stores with which they are associated, meaning that they are not much good when used for buying products and services from other stores. Unless people do most of their shopping at a single chain of stores, this means that store cards are much more limited in usefulness than their non-store-associated counterparts.

Second, a store card is often set up to ensure higher costs for the consumers and thus higher profits for the credit card issuer. Often, this means that store cards will have higher interest rates, thus ensuring that more interest will be charged on outstanding balances. However, store cards can have other conditions that result in higher costs for the consumers, with one example being the lack of an introductory period and another example being low minimum payments meant to encourage the credit card user to build up a bigger and bigger outstanding balance. In other words, store cards tend to provide the credit card user with high costs in exchange for poorer rewards, which is not a good deal under normal circumstances.

Third, store cards can have negative consequences for a person’s credit score if they fail to exercise the proper care and consideration. This is because store cards tend to have lower credit limits, which is a serious problem on its own. However, low credit limits are even more problematic because of their relevance for credit utilization, which is one of the most critical factors used in the calculation of credit scores. Simply put, a lower credit limit means a higher credit utilization rate whenever someone puts a balance on a store card, which can cause their credit scores to fall if they are using a bigger share of the total credit that is available to them. For that matter, it should be mentioned that applications for credit cards come with hard inquiries for credit cards, meaning that getting too many store cards at around the same time can have a detrimental effect as well.

Further Considerations

With that said, each person has their own particular set of needs and circumstances, meaning that it is not impossible for there to be someone who finds a store card to be perfect for them. For example, someone who does either all or almost all of their shopping at a single chain of stores should check to see if said chain happens to have a store card with useful benefits. Furthermore, it is possible for people to mitigate the more problematic aspects of store cards through smart and sensible use of credit cards. For example, higher interest rates on outstanding balances are much less problematic when a credit card user chooses to pay off their outstanding balances in each month. As a result, it is not impossible for there to be a situation when someone will want to get a store card so long as they understand exactly what they will be getting as well as exactly what they will be paying.


Otherwise, people should consider looking at some of the other credit cards that can be found out there. For example, if someone is interested in rewards, they should check out rewards-oriented credit cards, which can offer them incentives to spend on a wide range of products and services from a wide range of businesses. Likewise, there are other credit cards catering to other credit card users with other preferences, meaning that there is no reason for interested individuals to resort to store cards. Simply put, the more that interested individuals are willing to search for the right credit card, the better their chances of finding it.

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