"Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like."
-- attributed to Will Rogers 

America is a shopping paradise, with myriad retail stores that offer clothing, foods, electronics, and much more. Savvy shoppers often make a sport of seeking the best prices through sales, discount offers, and other deals. You might not want to just use your everyday Visa card, though, as many stores have their own cards, offering even better deals.

woman at cash register handing credit card to cashier

Image source: Getty Images.

Here are five important upsides and downsides to using store credit cards:

Upside No. 1: Discounts, offers, and cash back

The main benefit of using a store credit card is that, typically, it offers a discount when you shop at that retailer -- and many store credit cards offer even more, such as some perks. Here are some examples of what cards associated with a few major retailers recently offered. (Terms can change over time, though, so double-check before you rush to sign up for any, and note that there are limits to some of these rates.)


At the Store (or Its Website)

Other Benefits


Up to 5% back depending on the card you get

2% back at restaurants, gas stations, and drugstores, and 1% back on other purchases


2% cash back

4% back on gas, 3% at restaurants and some travel, 1% on everything else


5% savings

Longer return period and free shipping at target.com


3% savings at Walmart.com

2% back on gas at Walmart and Murphy USA stations; 1% back at Walmart stores and everywhere else

Data source: consumerreports.com. 

Upside No. 2: Building credit

Using a store credit card can also help you build credit. Establish a history of charging expenses and then paying your bills off on time, and your credit score can rise. Store credit cards can be especially handy, as they're often granted to people whose credit scores wouldn't qualify them for other credit cards. On the other hand, they also tend to have lower credit limits. That's an issue when building a credit score, because the percentage of your total available credit that you owe (your "utilization ratio") influences your score significantly. (A ratio of 30% or less is generally best.) If you use store credit cards, aim to keep your balance owed in check. Here are the components of the widely used FICO score:

Component of Credit Score

Influence on Credit Score

Payment history


How much you owe


Length of credit history


New credit


Other factors such as your credit mix


Data source: myFICO.com. 

man looking into his wallet, worried, as lots of dollar bills are flying out of it

Image source: Getty Images.

Downside No. 1: Spending more

Of course, store credit cards, like other credit cards, have their dark side, too. Studies have shown that using any credit card instead of cash can lead many people to spend more. Spending more than you should or need to is bad enough, but credit cards also make it easy to accumulate debt. Worse still, credit card debt is almost always carried at very high interest rates. Even the best credit card rates these days are well into double digits -- at a time when the best savings accounts are paying 1.4% and 30-year mortgages can be had for 4% or 5%. Some store credit cards sport interest rates near 30%.

Downside No. 2: "Deferred interest"

Another danger is if you take advantage of a store credit card's offer to let you buy something for "zero interest" if you pay it back within a certain period. That's likely to be a "deferred interest" scenario, which can be costly. Imagine, for example, that you buy a $1,000 laptop and pay off $900 of it within the zero-interest period. You might expect to be charged interest on the remaining $100, but many cards will instead charge that interest on the entire $1,000! That could cost you several hundred dollars.

Downside No. 3: Credit score dangers

A last concern is that having too many credit cards can depress your credit score, especially if many or most of them are new -- as that lowers the average of your credit accounts and lenders like old accounts. So consider just getting one or a few store credit cards, for the stores where you shop the most.

blurry torso of woman in pink shirt - we see her hands holding credit cards fanned out and she's selecting one of them

Image source: Getty Images.

Choosing the best credit cards

When evaluating store credit cards -- or any credit cards, you should favor those with attractive features and avoid ones with noxious ones. Here are some features to look for:

  • No annual fee. Most credit cards don't charge an annual fee. Note, though, that if a card charges, say, $99 per year, and will deliver, say, $300 or more in value, then the fee can be worth it.

  • No penalty APR. A penalty APR is what happens when card companies raise your interest rate, often to 25% or more, if you're late paying a bill. Look in a card's fine print to see whether there's a penalty APR, and perhaps avoid the card if it's there. Plenty of cards don't have this feature.

  • Low interest rates. If there's a chance that you will occasionally be carrying a balance, you should favor cards with a relatively low interest-rate range.

  • Other fees: Find out what fees a card will charge you -- such as for paying your bill by phone, getting a cash advance, being late with a payment, exceeding your credit limit, and so on. Think about what services and/or fees might apply to you and what the card might cost you.

Credit cards can make your financial life easier and can even put more money in your pocket, if you use them responsibly and strategically. Used without discipline, though, they can get you in financial hot water.