If this is your first time you apply for a credit card, you may realize that some retail stores, travel companies, and other services issue their own credit cards.
Now, let’s learn the difference between store credit cards and regular credit cards.
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A store credit card rarely requires complicated qualifications as it is intended to encourage the user to make more purchases. If your credit card application has been rejected before, you’d better try your luck with a store credit card first. However, it can’t improve your credit score like the regular credit card.
Have More Restrictions and Lower Limits
As you know, a store credit card can only be used in the store that issues it, unless the store is affiliated with other lines of business. Therefore, you’d better look for a store credit card that is issued by a business group so that you will get a wide variety of products.
Moreover, the starting limit is way lower than a regular card. $300 or $500 are very common first-time offers. But you can get a raise after you reach a certain purchase point or fulfill the store’s terms.
Difficult Rewards
Since you will be spending your credit at one store only, accumulating reward points will be typically difficult. In fact, most promos have time limits, which is not a preferable feature among many credit card users. But you can get considerable discounts on some offers for sure. Therefore, don’t get directly tempted if you see the promised rewards. Learn the terms and conditions first.
Higher Interest Rates
According to a 2019 survey by CreditCards.com, the average APR of store credit cards are 26.01%, while the regular ones are 21.10%. It means that you are going to pay more money if you apply for an installment for a purchase. The trick here is to check the cobranded store credit cards as they tend to charge lower interests. But still, you should pay attention to the details on the terms and conditions.
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As stated above, store credit cards won’t improve your credit score. And although there will be privileges and special offers that you can get from the issuing store, those benefits are supposed to be complementary only. Later on, you will have to aim at the regular credit card to build your scores.