What are some advantages and disadvantages of a store credit card?

Some advantages of a store credit card are that you can earn rewards for purchases, and you can use them to improve your credit, too. On the other hand, store cards tend to come with high interest rates, and may not work outside of the stores that they are affiliated with.

Pros of Store Credit Cards

• Rewards: Store credit cards allow you to earn rewards on purchases made at the affiliated stores. These rewards can add up over time and provide significant savings.
• Credit Building: Store credit cards can be a valuable tool for building or improving your credit history. By making regular, on-time payments and keeping your credit utilization low, you can demonstrate responsible credit management and increase your credit score.
• Discounts or Free Shipping: Many store credit cards offer additional perks such as exclusive discounts, special promotions, or free shipping on purchases made at the affiliated stores. These benefits can help you save even more money on your shopping expenses.
• Don't Need Stellar Credit to Qualify: Unlike some of the best rewards credit cards, store credit cards are often accessible to individuals with fair credit, making them a viable option for those looking to establish and build their credit history.

Cons of Store Credit Cards

• High Interest Rates: Compared to traditional credit cards, store credit cards typically come with higher interest rates, which can result in significant costs if you carry a balance from month to month.
• Limited Acceptance: Store credit cards may only be accepted at the affiliated stores and cannot be used for purchases elsewhere, limiting their usefulness compared to general-purpose credit cards.
• Deferred Interest Plans: Some store credit cards offer deferred interest financing plans, where interest is deferred for a promotional period but accrues retroactively if the balance is not paid in full by the end of the period. This can lead to unexpected interest charges if you're not careful.
• Potential to Overspend: Store credit cards may tempt you to overspend, especially with enticing rewards and discounts. It's important to budget carefully and avoid making unnecessary purchases to prevent debt accumulation.

Just like with regular credit cards, responsible use is the key if you want your store card to work in your favor. If you’re interested in applying for one, you should check out the best store credit cards on the market, picked by WalletHub’s editors.