Table of Contents

Store Cards vs. Traditional Credit Cards: What’s the Difference?

Store credit cards could offer short-term value, but traditional credit cards are typically better.

Why You Can Trust CNET Money
CNET Money’s mission is to help you maximize your financial potential. Our recommendations are based on our editors’ independent research and analysis, and we continuously update our content to reflect current partner offers. How we rate credit cards
Runstudio / Getty Images

When the cashier hits you with their store’s credit card offer -- a one-time discount on your pricey shopping spree -- it probably sounds well worth it. However, just because you’re getting a deal doesn’t necessarily mean it’s a smart move. In the long run, a traditional credit card is nearly always better than a store credit card.

Store cards, or retail cards, have a lot of similarities with traditional credit cards. Overall they operate the same, but they tend to have less strict credit requirements, aren’t as flexible and don’t have the robust features that some of the best traditional credit cards offer.

Here’s what you should know before signing up for a store card.

Store credit cards often have higher APRs

One of the most important differences between the two is that store credit cards typically have a higher annual percentage rate, or APR. That means if you maintain a balance from month to month, you’ll have to deal with higher interest charges. According to CNET’s sister site Bankrate, the average credit card APR is around 19%, but it’s common to see a store credit card with an APR of 24% or more.

However, if you’re paying off your statement balance in full each month (as you should if you can afford it), you won’t have to worry about interest charges. 

Some store credit cards can also provide some confusing terms. For example, rather than providing a standard introductory 0% APR offer to help avoid interest charges, they may instead provide a deferred financing offer. Deferred financing is a riskier offer. If you miss a payment, you could be charged retroactive interest starting from the date of the purchase.

Store credit cards have lower credit limits

Generally speaking, store credit cards offer lower credit limits than traditional credit cards. According to Experian, the average credit limit in 2020 was about $30,000. But with store credit cards, you should only expect a small fraction of that.

Store credit cards and their rewards can’t be used everywhere

Store credit cards come in two forms: a closed-loop credit card and an open-loop credit card. Closed-loop cards can only be used with their affiliated stores, while open-loop credit cards can be used anywhere their payment network is supported, meaning Visa or Mastercard.

If a store credit card is a closed-loop card, it won’t offer any rewards outside of the store it’s affiliated with. In comparison, open-loop or standard credit cards typically offer broader reward programs and can earn their rewards as cash back, points or miles across a wider selection of purchase types. Store cards generally earn their rewards as points or cash back.

Store cards also offer fewer redemption options than standard credit cards. They generally focus their redemption options on their affiliated stores, whereas standard credit cards offer a wide variety of redemption options, whether it be for travel, gift cards, statement credits or cash back.

Store cards typically have lower-value welcome bonuses

Compared to traditional rewards or cash-back cards, the welcome offers on retail credit cards tend to be lower and have more restrictive redemption options. Rather than earning points or cash back, retail cards typically provide store credit, coupons or discounts that can only be used at the store it’s tied to. And the cash value of the store credit or discount usually works out to be less than the standard $200 welcome bonus found on many no-annual fee rewards cards

The advantages of store credit cards

While there are a number of disadvantages to store credit cards (high APRs, limited perks and rewards, lower credit limits), there are a few positives.

Store cards have less strict credit requirements

Store cards are typically easier to qualify for. This is particularly true of closed-loop cards. If you have poor or limited credit, you may have an easier time getting approved for a retail credit card. They operate the same as standard credit cards, meaning you can improve your credit with responsible use.

Store cards offer retailer-specific benefits

If there’s a retailer that you shop with frequently, a store credit card could offer special discounts, expedited shipping or other store-specific benefits.

Easier to obtain welcome bonus

While store card welcome bonuses are typically worth less than those of traditional rewards cards, they can be easier to qualify for. Standard rewards cards usually require you to meet a certain spending threshold within a certain timeframe to earn your bonus, but store credit cards might offer you an instant discount or store credit the moment you sign up. 

If there is a spending requirement to reach the bonus, it’s usually less than that of a traditional credit card. You’ll also get access to your bonus quicker, often being able to use the discount or credit on the same day you open your card.

Who should get a store credit card?

Although some store credit cards are a worse deal than a generic cash-back credit card with rewards categories, they can be the right fit for certain people or situations. You should consider getting a store credit card if:

  • You need to build credit. Store cards are usually easier to obtain than traditional credit cards, although secured and credit-builder cards are equally good options. Once you have your card, you can improve your credit score with on-time payments.
  • You frequently shop at a certain store. Store cards often offer recurring special discounts and promotions that could save you money with your favorite retailer, or provide perks like free shipping.
  • There’s a specific welcome offer you can take full advantage of. While store card welcome offers tend to be worse than those of a standard credit card, there are some niche situations where you can get good value for your money. For example, the My Best Buy® Visa® Card* offers 10% cash back on your first day of purchases with no spending cap at Best Buy after you get the card. If you’re already planning to make a large purchase at the store, you could easily turn this welcome offer into hundreds of dollars’ worth of rewards.

The bottom line

Retail credit cards could be a good option if you don’t have the credit to qualify for standard cards, or you shop frequently enough with a store to make the discounts and perks worth it. However, just keep in mind they often have higher APRs and are less rewarding than standard credit cards. Don’t carry a balance and try not to get enticed into signing up for a short-term benefit without thoroughly considering your needs and researching alternative options.

*All information about the My Best Buy Visa Card has been collected independently by CNET and has not been reviewed by the issuer

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Evan Zimmer has been writing about finance for years. After graduating with a journalism degree from SUNY Oswego, he wrote credit card content for Credit Card Insider (now Money Tips) before moving to ZDNET Finance to cover credit card, banking and blockchain news. He currently works with CNET Money to bring readers the most accurate and up-to-date financial information. Otherwise, you can find him reading, rock climbing, snowboarding and enjoying the outdoors.
Advertiser Disclosure

CNET editors independently choose every product and service we cover. Though we can’t review every available financial company or offer, we strive to make comprehensive, rigorous comparisons in order to highlight the best of them. For many of these products and services, we earn a commission. The compensation we receive may impact how products and links appear on our site.