6 Reasons You Should Think Twice Before Getting a Store Credit Card

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• Store credit cards might sound like a good idea, but for most people, they’re not the best option.
• Travel and cash-back cards usually earn more in rewards thanks to welcome offers and category bonuses.
• Store credit cards also come with astronomical interest rates and lack shopping protections.
• Read Insider’s guide to the best rewards credit cards.

Holiday shopping may look a little different this year, but one thing will probably stay the same: You’re likely to hear at least a pitch or two for a store credit card.

It may come online instead of at the register, but the gist will be an offer for a card that will save you money on that day’s purchase, as well as earn you discounts or rewards points down the line. 

That doesn’t sound so bad, right? After all, everyone likes saving money — particularly during what can be an expensive time of year. The thing is, if you’re going to open a credit card, a store card is rarely, if ever, your best option. Here are six reasons to stay away.

We’re focused here on the rewards and perks that come with each card. These cards won’t be worth it if you’re paying interest or late fees. When using a credit card, it’s important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay.

1. You can find far better intro offers

Sure, lopping 15% or 20% off what you’re about to spend at a store may be enticing, but unless you’re spending a literal fortune, it pales in comparison to the kind of welcome offers you’ll see from many travel rewards cards and cash-back credit cards.

Take the Chase Sapphire Preferred® Card, for example: It’s currently offering 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. Redeemed through Chase’s travel portal, that’s $750 in value — and if you transfer those points to Chase’s travel partners, it can be worth even more than that (about $1,080 in travel, according to Insider’s valuation of Chase points).

2. Their rewards-earning power is limited

Of course, it’s not all about the sign-up bonus. Part of the appeal of store credit cards is that they usually offer customers an opportunity to save money in the future, whether through exclusive discounts or a rewards points system. But while you may get rewarded for shopping at that particular store, you might not earn rewards anywhere else — and that’s a stark contrast from most travel and cash-back cards.

Take the Blue Cash Preferred® Card from American Express, for example: With the card, you’ll earn 6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%), 6% cash back on select U.S. streaming subscriptions, and 3% cash back on U.S. gas stations and transit — along with 1% cash back on all other purchases. That’s a diverse set of ways to earn major rewards without being confined to a single retailer or spending category (cash back is received in the form of Reward Dollars).

While store credit cards were designed for shopping, they still can’t measure up to other cards when it comes shopping protections.

Many credit card issuers offer robust benefits for customers, including price protection, which you can use to get reimbursed for the difference if the price on an item drops after you buy it; extended warranty protection, which will lengthen the warranty period on certain items you purchase; and purchase protection, which can shield you if a recently purchased item is lost, damaged or stolen.

4. Their interest rates are astronomical

If you thought travel credit card interest rates were high, check out the rates on store credit cards. The average APR for retail credit cards is 26.72%, according to a November 2022 report from CreditCards.com — well above the average credit card interest rate of 18.43% reported by the Federal Reserve for the third quarter of 2022.

Depending on what store’s credit card you’re considering, though, that number could easily be higher. That same report found that several store credit cards bear a sky-high 30.74% rate. Of course, the most responsible way to use any credit card is to pay it off in full every month — but if there’s any chance that may not happen, you’ll find yourself in a rapidly deepening hole if you go the store credit card route.

5. They prevent you from taking out more lucrative cards

Ever heard of Chase’s 5/24 rule? Essentially, it says the issuer will reject any applicant that has opened five or more credit cards in the last 24 months. And that limit isn’t exclusive to those who have taken out five of Chase’s credit cards in the last 24 months, either — it applies to any credit card (except certain business cards), including store credit cards.

While that cap might not be an issue for some people, if you’re looking to maximize your daily spending by diversifying the tools in your wallet — or simply working to accrue points and miles in advance of a big trip — you may want to take note. After all, remaining over 5/24 can keep you on the sidelines if a great limited-time welcome bonus opportunity comes around, and you may wind up kicking yourself for it later.

Taking out a store credit card can hamper your ability to take out cards outside of Chase’s lineup, too. Each time you apply for a card and the bank does a “hard pull” on your credit, your score will temporarily take a hit. In order to capitalize on the best welcome offers out there, you’ll want to make sure your credit score is as high as possible when applying. And because you never know when a great opportunity will come along, it’s wise to make sure you’re springing for the cards that will benefit you most.

6. You have plenty of other ways to maximize retail purchases 

If you’ve gotten this far and are still thinking, “Okay, but what if I want to earn rewards on retail specifically?” — that’s fair. Popular travel and cash-back credit cards don’t tend to offer bonuses for retail purchases, and if you spend a lot of money on clothes, home décor, or electronics, for example, you might not love the idea of only earning 1 point per dollar or 1% cash back.

Luckily, there are multiple ways to make sure you’re getting a much better return on your retail spending, even without a store credit card. For one, online shopping portals offer the opportunity to earn valuable points and miles —or, with a portal like Rakuten, cash back — on your purchases, no matter what credit card you’re using; simply visit your portal of choice and click through to a retailer’s website to do your online shopping, and just like that, you’ll earn rewards.

You can also get creative with your card’s bonus categories to make them more retail-friendly. Got a card — such as the American Express® Gold Card
 — that earns bonus points at US supermarkets? See if you can find a gift card at the supermarket for your favorite retailer.