8 Things to Consider Before Opening a Store Credit Card This Holiday Season

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  • Many stores promote store credit cards that allow frequent shoppers to earn rewards.
  • Not all store credit cards are created equal, so it's important to research whether a particular card will meet your needs and offer value.
  • Consider the welcome offer, rewards redemption, and costs to own the card before you sign up.

Make sure a store card is a good fit first.

Now that the holidays are near, you may be shopping more than usual. While shopping, you may be asked if you want to open a store credit card to save money and earn rewards. Before adding a new credit card to your wallet, you should carefully think through that decision. Here's what to consider before opening a store credit card this holiday season.

1. The value of the welcome offer

Usually, retailers entice shoppers to sign up for their store cards by promoting a welcome offer. Typically, this is a one-time discount on your first order when you sign up for the card and get approved. However, the welcome offer isn't always substantial.

Let's imagine you're about to spend $100, and a potential store credit card has a welcome offer of 10% off your first order. You'll need to decide if a discount of $10 is worth opening up a new credit account.

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2. How rewards are earned

You should also review how you will earn rewards with the card. You'll probably only earn rewards when shopping at that particular store or other stores that are part of the same network of brands. Figure out what the rewards rate is and how the card earns rewards so you can calculate the rewards potential.

3. Your redemption options

It can be beneficial to research what your redemption options are. Will you earn cash back in the form of a statement credit, or can you redeem your rewards in other ways? Most store credit cards have limited redemption options, unlike other credit cards on the market.

4. Whether the card promises other benefits

Beyond earning rewards for spending money at a specific store, are there other benefits offered with this card? Some store credit cards lack additional benefits that other rewards credit cards often come with. If you're hoping to get benefits like purchase or extended warranty protection, you'll likely want to apply for a different type of credit card.

5. Know the credit card's interest rate

Credit card interest can be costly and adds up fast if you allow credit card debt to accumulate. Paying your entire credit card balance is an excellent way to avoid paying interest.

But it's still a good idea to research the store card's annual percentage rate (APR), or interest rate to understand what kind of interest you'll be charged if you carry a balance on the card. If the card advertises a 0% interest rate, it's likely only available for a limited-time period.

6. Whether you'll be charged an annual fee

Some store credit cards have no annual fees, but that's not true for all store cards. Make sure you know whether there's a yearly fee before getting a new card. If there is an annual fee, consider whether the yearly fee is worthwhile for the potential rewards and benefits offered.

7. Whether you can use the credit card at other stores

Most store credit cards are closed-loop, meaning you can only use them at the retailer that issues the card. But some cards are open-loop, meaning you can use them anywhere the credit card network, like Visa or Mastercard, is accepted. Knowing this before choosing a card will enable you to get the most out of your new card and can help you avoid disappointment.

8. Your shopping and spending habits

Finally, it's a good idea to consider your shopping and spending habits. Do you shop at the store often enough to make earning with the card worthwhile? It may not make sense to open a store card if you're an occasional shopper, especially if you need to pay an annual fee. But for frequent shoppers, opening a card may be a good option.

Are store credit cards worth it? Only you can decide. Some store credit cards are more valuable than others. The above considerations can help you decide whether a particular store credit card's benefits meet your needs and align with your financial goals.

Check out our best store credit cards list to learn about your card options.

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