3 Reasons Store Credit Cards (Usually) Aren't Worth It

I'm a fan of a certain department store chain. Mostly, I buy clothes and shoes there, but I've also been known to wander through its housewares section. And without fail, when I get to the register to pay for my purchases, I have to fight off a clerk who is bound and determined to convince me to apply for the store's credit card.

Once, I even had a checkout clerk demand my driver's license after I politely declined the offer! (Needless to say, I didn't give it to her.)

I'm sure their sales tactics work on less-savvy consumers. But I'm a personal finance writer and editor, and I'm already well aware of how store credit cards work. Here are a few reasons these cards are best avoided -- and why you should opt for a general rewards credit card instead.

1. Lousy welcome offers

The pitch that the checkout clerks always try on me goes like this, "Want to save 10% on your purchases today?" I'm not made of stone -- saving money is great. But come on! You can find welcome offers on standard credit cards that amount to hundreds of dollars in cash back, points, or travel miles. The credit card I have been using to buy items at this particular store came with a welcome offer of $200 in cash back after spending $500 in the first three months.

To be fair, sometimes the welcome offer on the store card is better, like 35% off your first purchase. But this isn't the only drawback for store credit cards.

2. Sky-high APRs

Credit card interest is no joke, which is why it's best to avoid carrying a balance whenever possible (unless you have a 0% intro APR offer and are paying off a large purchase over time). According to the Federal Reserve Bank of St. Louis, the average interest rate across credit cards charged interest was 22.76%, as of May 2024 -- ouch!

For laughs, I decided to look up the APR for the store credit card I'm always being offered. It's 31.24%, and you'll often find APRs close to 30% or higher for other retail store credit cards.

Combine this with the fact that the card is pushed on unsuspecting consumers who may not know how credit card interest works, and a less-stringent credit score requirement than many rewards cards, and you've got a recipe for shoppers to get trapped in a cycle of debt.

3. Limited-use rewards

Finally, store credit cards are best avoided because the rewards you earn are generally only good at that one store (or perhaps a small handful of stores owned by the same parent company). That also means you might only be able to use the card at that store -- many store credit cards are "closed loop."

Do you really spend enough money at one store to make that worthwhile? If you truly do, then sure, maybe that store's credit card is a good fit for you. And if you've got a lower credit score and could use some help increasing it, using the card and paying it off every month could help your credit improve.

A general rewards card is a better option

In nearly all cases, it's a better idea to apply for a rewards or cash back credit card instead. You'll generally earn a rate of 1% across all your non-bonus spending (but some cards up that to 1.5% or even 2% -- but with a flat rate of 2%, you generally won't get bonus categories). And most of the best rewards credit cards come with bonus categories where you can earn 2%, 3%, or more.

Put most of your spending on the card, pay it off every month, and you're more likely to come out ahead than you will with a store credit card.