Store Credit cards; Pros, Cons & Why do retailers push it?

You’ll often come across a credit card signup offer at the checkout in major department stores and retailers. Getting on board is tempting, especially when the signup bonus and cashback benefits are too hard to resist.   

Store credit cards have many pros, from saving money to getting extra perks. For businesses, it helps to keep loyal customers, improve marketing campaigns and generate additional revenue.

What is a Store Credit Card?

A store credit card is a type of credit card that retailers offer their customers. These cards can be private-level store credit cards or co-branded general-purpose store credit cards. While closed-loop cards only work at the issuing stores, co-branded store credit cards work worldwide. 

Best Store Credit Cards

Almost every name-brand department store, furniture, home improvement, or retail store offers a store credit card at their checkout section. Everyone comes up with a creative way of luring customers to come on board. Most offer quick on-site approval with no customer wait time to enjoy benefits. 

The following is the list of store credit cards that are better bang for your buck in terms of benefits. 

#1 Amazon store card

With an instant $50 signup gift card bonus upon approval, the Amazon reward visa card is one of the best store cards if you buy almost everyone from Amazon. Amazon has an estimated 300 million active users on its marketplace. There is nearly everything on Amazon.

Amazon also offers Amazon Prime Rewards Visa Card that rewards a $100 amazon gift card upon approval. It has bigger and better benefits when combined with prime membership. 


  • No annual fee
  • Fraud protection
  • 5% cashback on Prime membership or 3% without Prime membership
  • 2% cash back at restaurants, gas stations, and drugstores
  • 1% cash back on all other purchases


  • Steep Annual Percentage Rate (APR) of 26.24%
  • $40 late payment fee

#2 Apple card

Partnering with Goldman Sachs, Apple released its credit card named Apple Card. This general-purpose credit card works for all transactions, and the benefits are alluring. 

You can only apply for an apple card if you have an iPhone. Without an iPhone, requesting a physical card is impossible; you’ll only get a line of credit upon approval. Apple credit card links to Apple pay into the wallet app.


  • No card number or CVV on the card that protects against stolen online purchase
  • 3% cash back with apple and select merchants when used with Apple pay
  • 2% cash back with Apple Pay
  • 1% cash back on all other purchases
  • No annual or international fees
  • Clear transaction labeling on Statement
  • No interest installments on Apple products with an Apple card
  • General Virtual credit card for extra security


  • Higher interest rates based on your credit score
  • You need an iPhone to use it

#3 Walmart store card

With up to a 5% cash back reward, the Walmart store card is also one of the best store cards that give you a better bang for your buck. The retailer offers Capital One Walmart Reward Card that works anywhere that accepts Mastercard.  

The credit card benefits the regular shopper in-store and online at


  • 5% cash back on online purchases at and in-store with Walmart pay for 12 months
  • 2% cash back at Walmart Stores without Walmart Pay
  • No membership fee, fraud protection, and easy card lock for lost or stolen cards


  • Steep APR of 26.99%
  • Late fees can go up to $39.

#4 Other store credit cards

The other retail stores that offer credit cards include best buy, Macy’sMacy’s, target, lowes, Bed bath and beyond, Ashley’s home, and many more. Stores partner with credit companies to co-brand the card and offer their customers. The store cards usually have better rewards and cashback for being loyal to the company. Still, the rewards points are similar to the traditional credit cards for purchases outside the issuer’s business. 

Easy Approval Store Credit Cards

A couple of easy approval store credit cards for those looking for bad credit store cards are Amazon Rewards visa signature card, Target card, Kohl’s card, JCPenny credit card, and TJX rewards credit cards. These cards require you to have a fair to good credit history.  

The store card application is pretty straightforward. You can apply for the credit cards through the website or at the store checkout in person by filling out essential information. The application is quick, and you’ll get the results instantly. Most people get approved quickly because the retailers can influence the approval process by lower credit limits.

Can you use store credit cards anywhere?

Stores offer two types of credit cards. It can be either a “closed-loop” or co-branded store card. The “closed-loop” store cards work only at the stores which offer them. In contrast, co-branded cards work just like any other traditional cards. 

Pros and Cons of Store Credit Card

Store credit cards can present many advantages to the consumer, from cash back to discounts. With a store credit card, you’re another loyal customer of the business and, therefore, will get special treatment. At the same time, they can be very limiting in terms of their offer. 

Pros of a Store Credit Card 

#1 Signup bonus

Store cards usually have a signup bonus applied to your purchase immediately upon approval. It means you’re getting a discount on your purchase. 

For example, TJ Maxx offers a 10% off on the first purchase when a customer opens an account and gets approved. That is equal to a $100 discount on a $1,000 purchase. Similarly, Amazon offers a $50 welcome bonus as a gift card that applies to any purchase instantly.

Most businesses offer a lucrative signup bonus to encourage customers to apply. Although these are one-time bonuses, they help offset the cost.  

#2 Rewards on purchase

The higher cash backs or store points rewards are one of the main benefits that attract new members. The retailers offer cash back from 3% to 5% on in-store or online purchases. The reward is higher than traditional credit cards offer without an annual fee.

#3 Extra benefits for loyalty

Besides the rewards points or cash backs, most store cards also have added benefits for being loyal to the business. The extra benefits can be on specific products or services the store is promoting. 

For example, Apple offers interest-free monthly installments on Apple products if you purchase them through an Apple card. Similarly, Amazon provides an extra 10% bonus on select products with a prime card bonus. 

Cons of a store credit card

#1 Higher interest rates

The store credit cards have high-interest rates. Some store card interest rates are higher than the traditional credit cards. Some also have a hidden fee that is difficult to spot in the fine print. 

The interest rates do not apply as long as you’re paying dues monthly and do not carry any balance. But when you miss a payment or can’t cover the expense, you’ll be charged a hefty interest rate. 

#2 Credit score impact

Every credit card application involves a credit inquiry that impacts the credit score. Keeping the credit application to as minimum as possible is always advisable. The higher number of credit inquiries in a short period indicates greater credit risk. It could result in getting rejected for a credit application. 

“Applying for a credit card is considered a “Hard Inquiry” and can temporarily impact your credit score. The inquiry remains on your credit report for up to two years, but the hit to your credit score is minimal, and most credit bureaus add any reductions after 12 months. ” says Brett Tushingham, CFP, Founder and Financial Advisor of Tushingham Wealth Strategies, LLC.

He also adds – “If you intend to apply for a mortgage or business loan soon, it would be wise to refrain from credit card applications until after your loan has closed. It will optimize your credit score and ensure you obtain the best possible rate. Even a slight reduction in your credit score could bump your interest rate and substantially increase your borrowing costs over the life of the loan.” 

#3 Limited use

The “closed-loop” store cards are limited to the stores that issue them. They do not work everywhere, unlike traditional credit cards. The co-branded cards that work universally may also have limitations on use, benefits, and balance. 

Generally, store credit cards have a lower credit limit than standard credit cards. Retailers approve customers with a low credit limit to protect themselves against an unpaid balance. Therefore, store cards can’t cover big purchases. 

Why do Retailers Push their Employees to Sell their Credit Card?

If the cashier has asked you to sign up for the store credit card for discounts and benefits, you know what I’m talking about here. Retailers push their employees to sell store cards. Some even run a contest among the sales associates for the higher number of store card applications.

So, why do retailers encourage their employees to motivate customers to store credit cards? There are just so many advantages to the business. 

#1 Build Loyal and Repeat Customers

Store credit cards are the best way to build customer loyalty. The added benefits and cashback rewards bring repeat customers and keep them within the business. It also encourages them to spend more for higher rewards points.

#2 Encourage Sales Through Promotions and Events

Stores can increase sales through promotions and events. Limited time extra rewards promotions can boost sales by creating urgency in customers to collect additional points. It helps to make them feel they’re getting items for a bargain.  

#3 Collect consumer data

Credit cards are the best ways to collect data. And the consumer data is not easy to find. With customer financial information on file, businesses can run targeted marketing campaigns to increase revenue. It helps reduce wasteful marketing spending. 

Data is bread and butter for a business. It helps make better business decisions, review and improve marketing campaign performance. Overall, it helps to understand the customers, which is the prime focus of a business. 

#4 Less processing fee

Credit cards have many fees, namely, processing, assessment, and interchange fees, and they all add up. With store credit cards, there are fewer fees to process. That’s why retailers can offer higher reward points or cash back. The reduced fees are cost savings for the businesses.  

The Bottom Line

Store cards are best for building a credit history. It is fairly easy to get approval, and the benefits are great. As long as you are a responsible spender and pay off the balance every month on time, store cards help save money.

If you struggle with money and make impulsive purchases, you should refrain from getting a store card. Trying to get a discount can cost you dearly.