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Store credit cards

Store credit card buying guide

Last updated: January 2015
Getting started

Getting started

Store credit cards often feature enticing goodies that are ultimately designed to wed you to their retail brand or card-issuing partner. Target, for instance, gives REDcard holders 5 percent off every purchase--at Target. The Amazon.com Rewards Visa, meanwhile, offers 3 points per dollar for purchases at Amazon, but only 1 point per dollar for spending elsewhere. Some retailer cards offer other kinds of perks, such as special sales that are available only to cardholders, no-receipt returns, free shipping, and offers of zero-interest financing. You might even get a cash bonus of $20 to $30 just for signing up for the card.

But there's a downside: Some store cards have interest rates in the mid-20 percent range that are double what you'd pay with traditional credit cards, and opening too many accounts at once could tarnish your credit score. Here are some tips to find store cards that will pay off for you.

Get the right type

Retailers offer a confusing array of card options. Many offer co-branded credit cards bearing an American Express, MasterCard, or Visa logo, which can be used anywhere those cards are accepted. You'll earn points on all your purchases with the card, not just at the store that issues it, but you'll probably earn less for using the card at other retailers. Another type of store charge card can be used only at the issuing retailer, a marketing tactic that aims to make it easier for you to spend now at the home store and pay later. Some large chains, including Bloomingdale's and Macy's, issue store charge cards and co-branded credit cards.

Another type of store credit card can be used only to finance a big purchase. These cards are issued by electronics or home-improvement stores to grease the sale of expensive merchandise. Apple Rewards Barclaycard, for example, offers instant credit with the chance to repay the loan over 18 months and pay zero interest charges, on purchases of $999 or more. That can save you a bundle. But there's a catch: If you don't pay off the balance in full by the end of that period, or if you're late with only one payment any time during that year-and-a-half, you'll be charged the full interest rate for the entire 18 months. That a clever trap.

Guard your credit

Some retailers try to lure you into opening a card account by offering a 10 to 15 percent discount on all purchases made on that day. If you're buying a lot, the savings can be an incentive, though there may be a cap on the amount you can spend, and the discount doesn't apply to all the subsequent purchases you'll make with that card.

But you should avoid opening several credit-card accounts at once--a common holiday-shopping pitfall--because it could cause your credit score to drop. And since some store cards have very low monthly credit limits, you might end up charging close to the limit. That will increase your debt-to-available credit, which can also lower your score.

Opening multiple card accounts in a short period could also reduce the average length of your credit history, a component that makes up about 15 percent of your score. If you open just one store card to take advantage of the up-front savings on a large purchase, that might drive your score a bit lower temporarily.

And if you can't pay your monthly balance in full, the interest you'll be charged could wipe out the discount you got for signing up for the card. The average bank credit card has an interest rate of about 15 percent, but cards from Bloomingdale's, Macy's, and Sears have interest rates of about 25 percent. Some store cards, like those offered by JCPenny, HomeGoods, Marshalls, and T.J. Maxx, are even higher, 27 percent, while NAPA Auto Care, levies a whopping 30 percent interest rate.

Maximize your rewards

Make sure you read the terms of your card agreement and rules regarding the rewards (including whether your points expire) before you sign up for a store card. For example, rewards from L.L. Bean come in the form of coupons for savings only on Bean gear and apparel. Meanwhile, JCPenney points don't roll over or accumulate from one month to the next, so you lose any points that don't reach a redeemable 100-point bundle by month's end.

If you don't spend a lot of money in a particular store every year, you might find that you don't earn much in rewards. For example, Macy's has three levels of rewards. Preferred, the most basic--for people who spend less than $500 at the store a year--offers 1 percent back on store purchases. But if you spend $500 to $999, you'll get 1.5 percent cash back on Macy's purchases. If you spend $1,000 or more, you'll earn 3 percent rewards on purchases plus access to a priority customer-service phone line.

Finally, some cards put a cap on rewards you can earn in some categories. For example, the co-branded Costco American Express card offers 3 percent back on gasoline purchases, but only up to $4,000 annually. Once you reach that, you'll earn just 1 percent cash back on purchases at the pump.

Comparing store credit cards

Want to get a little something back for all you spend at your favorite stores? Here are the details on credit cards offered by some major retailers, listed in alphabetical order. The programs can be complicated. For example, many stores offer several cards, including co-branded American Express, MasterCard, and Visa cards, which can be used elsewhere. Some programs offer different rewards based on the amount you spend. Card issuers can change interest rates, terms, and conditions at any time.

Amazon.com Rewards Visa

APR: 14.24% to 22.24% based on creditworthiness

Features: 3 points for every $1 spent at Amazon; 2 points for every $1 spent at gas stations, restaurants, drugstores, and office supply stores; 1 point per $1 spent elsewhere. $70 sign-up bonus.

Banana Republic/Gap/Old Navy

APR: 23.99% with Visa card, 24.99% with store card

Features: 5 points for every $1 spent at any of the stores, 1 point for every $1 spent elsewhere. 15% off your first purchase. For every 1,000 points earned on your Gap or Banana Republic accounts, a $10 certificate will be credited to those accounts. For every 500 points earned on your Old Navy account, a $5 certificate will be credited to that account. Earn 2,000 points for signing up for e-mail and voice message updates.

Barnes & Noble MasterCard

APR: 13.99% or 24.99%, based on creditworthiness, after a 15-month 0% introductory APR

Features: 5% rebate will be credited to your account for purchases at Barnes & Noble stores or online. 1 point for every $1 spent at merchants other than B&N, $25 gift card after your first purchase.

BJ's Perks Plus and Elite MasterCard

APR: 14.99% or 24.99%, 7.99% for Elite membership purchases in BJ's stores

Features: Plus and Elite memberships award 3% (5% for Elite) rebates on eligible purchases at BJ's locations; 2% rebates for eligible dining and gas outside of BJ's stores; 1% everywhere else that MasterCard is accepted; $25 ($50 for Elite) credit for your first non-BJ's purchase; and a 10 cents per gallon discount for fuel purchases at BJ's Gas. Note that BJ's Gas purchases DO NOT earn the usual 3% rebate.

Bloomingdale's American Express

APR: 24.5%

Features: 3 points per dollar spent on store purchases, 6 points per dollar spent on cosmetics and fragrances purchased at Bloomingdale's. 2 points per dollar on all purchases elsewhere. Every 5000 points gets you a $25 Bloomingdale's gift card. The basic store card gets you 10% off first 2 days' purchases, up to $250. The Reserve account, allows one triple points day per year.

Cabela's Club Visa

APR: 9.99% at store, 15.19% to 21.16% elsewhere

Features: 2% back on Cabela's and Cenex convenience store purchases, 1% elsewhere with Visa card. Earn $20 in points for signing up plus $10 after five purchases.

Costco American Express True Earnings

APR: 0% for 6 months, 15.24% after

Features: 3% back on gas purchases up to $4,000 a year, 1% after; 2% on restaurants and travel, 1% elsewhere, including Costco. Rewards issued annually.

HomeGoods/Marshalls/Sierra/T.J. Maxx TJX Rewards Platinum MasterCard

APR: 26.99%

Features: 5 points for every $1 spent at the stores, 1 point for every $1 spent elsewhere. $10 Rewards certificate per 1,000 points earned. 10% off first purchase.

JCPenney

APR: 26.99%

Features: You earn 1 point per $1 spent on qualifying purchases at JCPenney stores or online, and for each 100 points you earn in the same month, you get a $10 reward certificate. However, points don't roll over or accumulate from one month to the next, so you lose any points that don't reach a redeemable 100-point bundle by month's end. 20% off first purchase, excluding big-ticket items like watches, furniture, mattresses, custom blinds and shades, which qualify for only 10% off.

Kmart/Lands' End/Sears

APR: 25.24%

Features: Special financing offers. Monthly savings and sales events.

Kohl's

APR: 23.99%

Features: 15% off first purchase. Extra discounts of 15% to 30% at least 12 times a year. After spending $600 in a year, get at least 6 more discounts per year.

L.L. Bean Visa

APR: 13.99%, 16.99%, or 19.99%, based on your creditworthiness

Features: 3% rewards on store purchases, 1% elsewhere. 10% at L.L. Bean Outdoor Discovery Schools. Rewards given in $10 coupons spendable only on Bean gear and apparel. Free return shipping, and monogramming. Exclusive sales and offers.

Macy's American Express Star Rewards

APR: 24.5%

Features: Macy's store and online purchases earn 1% at the Preferred level, 1.5% at the Elite level, and 3% at the Premiere Elite level. Preferred level also earns 3% on gasoline and 5% on mobile purchases. Purchases elsewhere with the American Express card earn 1%. Periodic savings events.

Target REDcard

APR: 22.9%

Features: 5% off at Target. After filling 5 prescriptions, coupon for 5% off on a future shopping trip. Free shipping at Target.com.

Walmart MasterCard

APR: 22.9%

Features:Earn 1% on every $1 charged to the card for purchases, with rewards issued as statement credits in $5 increments. Get a $25 statement credit when you open an account and spend $75 and 5 cents per gallon discount at participating gas stations.

   

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