This article was updated on June 24, 2018.
Frequent Walmart (NYSE:WMT) shoppers may have come across the Walmart Credit Card in stores or online. In fact, the company offers two cards: the Walmart Credit Card, which can be used only in Walmart's stores, and the Walmart Mastercard®, which can be used anywhere.
Applying online can net you a $25 purchase credit on your first transaction, but you could be passing up a free 2-liter bottle of soda for applying in the store. Each store may give extra incentives to applicants.
But before you let Walmart pull your credit report just for a sip of something sweet, here's some information on how the Walmart credit card stacks up against its competitors.
An overview of the Walmart credit card
Both the Walmart Credit Card and Walmart Mastercard® offer 1% back in the form of a statement credit on every purchase, including Walmart stores and Sam's Club. Eligible cardmembers will also receive 2% cash back on purchases made at select gas stations and 3% back on online purchases made at Walmart.com. Note that purchases made at Walmart's other websites, including Samsclub.com and Jet.com, don't qualify for 3% back in rewards.
There's no annual fee for holding the Walmart Credit Card or Mastercard, but they do come with relatively high interest rates. For applicants with poor credit, rhe Walmart Credit Card comes with a 23.65% interest rate. The Walmart Mastercard® rate ranges between 17.65% and 23.65%, depending on the applicant's credit.
There doesn't appear to be a minimum credit limit, as some report limits as low as $75. Others report limits as high as $20,000. It really depends on your credit history, and if you show you can manage your credit line responsibly, you can ask for a credit limit increase and it won't result in a hard inquiry on your credit report.
A competing big-box store card might be more worthwhile
Even if you're a heavy Walmart shopper, neither the Walmart Credit Card nor the MasterCard presents a great value unless you primarily do all your shopping online at Walmart.com.
But Walmart shoppers who also take trips to Costco (NASDAQ:COST) may be interested in applying for the Costco Anywhere Visa card. It earns 1% on all purchases, as the Walmart cards do, but purchases made at Costco or online at Costco.com earn 2%. What's more, restaurant and travel purchases earn 3% back, and gas purchases at any gas station earn 4% back on the first $7,000 per year. In addition, Costco offers an introductory 0% interest rate for the first seven months of purchases.
The Costco Anywhere Visa card is significantly more useful than the Walmart Credit Cards, especially considering they both still earn 1% cash back at Walmart stores.
Better options for cash back everywhere
If you insist on shopping at a Walmart, then you may be able to do better than the 1% the Walmart credit card offers and still pay no annual fee.
If you do more shopping at Sam's Club or Costco than at Walmart, the Bank of America® Cash Rewards card (Read our full Bank of America® Cash Rewards review) may be a better option than the Walmart Credit Card. The card earns 2% cash back at wholesale clubs and grocery stores, which makes it a great option for people who shop around for their groceries. On the down side, Walmart isn't included in the grocery-store category. But the Bank of America® Cash Rewards card does earn 3% cash back on gas and 1% everywhere else. Note that there's a limit of $2,500 in bonus cash back spending per quarter.
Members of Bank of America's Preferred Rewards program could boost their cash-back bonus by up to 75%. That means Sam's Club and Costco shoppers could earn up to 3.5% back on all their purchases and fuel up for 5.25% off at the highest tier.
What's more, the Bank of America® Cash Rewards card currently offers a $150 sign-up bonus after spending $500 in the first three months. Plus, there's a 0% introductory interest rate on balance transfers for 12 billing cycles if made within the first 60 days. Card members do still have to pay the standard 3% balance-transfer fee.
Another great option for consumers who prefer to do their grocery shopping at Walmart is the Citi® Double Cash card (Read our full Citi® Double Cash review). It offers 1% back in rewards on every purchase (including Walmart stores) and another 1% back when you pay your bill, effectively giving card members 2% cash back on every purchase. That's better than both the Walmart Credit Card and Costco's credit card for everyday purchases.
While the Citi® Double Cash doesn't come with a sign-up bonus, the higher cash-back rate more than offsets the $25 (and free soda) sign-up offer for the Walmart Credit Card. In addition, the Citi®Double Cash offers an introductory 0% interest rate on balance transfers for the first 18 months. However, card members still have to pay the standard 3% balance-transfer fee.
One more option if your credit history isn't great
The Walmart Credit Card is fairly lenient on who will get approved. Even consumers with no or poor credit history can usually get approved for a small credit limit. But there may be another option if you don't have the credit score to get approved for one of the alternatives already mentioned.
Discover is typically more lenient than Bank of America or Citi when it comes to credit card approvals. And the Discover it® Cash Back (Read our full Discover it® Cash Back review) makes a great no-fee cash-back credit card option as well.
In fact, after the first year of membership, Discover will double the total cash back earned over the first 12 months. So you'll earn the standard rate of 1% cash back on every purchase during the year, and then Discover will double the cash back on your card-member anniversary, effectively earning 2% cash back on every purchase for the first year.
In addition, the Discover it® Cash Back card has quarterly bonus categories that allow card members to earn 5% cash back on up to $1,500 in spending. Examples include gas stations, restaurants, and wholesale clubs. And since Discover will double cash back after the first year, card members could earn 10% cash back on those categories for their first year of holding the card.
Before you apply for the Walmart Credit Card, we recommend you consider applying for a more rewarding cash-back credit card first. The Walmart Credit Card (and that free soda) will still be there if you don't have the credit score to get approved for one of our recommendations. Then you can use the Walmart Credit Card, and our helpful advice, to raise your credit score and qualify for a better card next year.
Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Costco Wholesale, MasterCard, and Visa. The Motley Fool has a disclosure policy. The Motley Fool receives compensation from some advertisers who provide products and services that may be covered by our editorial team. It’s one way we make money. But know that our editorial integrity and transparency matters most and our ratings aren’t influenced by compensation. The statements above are The Motley Fool's alone and have not been provided or endorsed by bank advertisers. Review The Motley Fool’s ratings methodology to uncover how we pick the best credit cards.