A Brief Overview of Department Store Credit Cards

For those who tend to do a lot of their shopping at a single store, department store credit cards offer several benefits that do not come with general-purpose credit cards. But finding the best store credit cards to save you the most possible money is not always a simple task.

Department store credit cards have a reason to give you, the consumer, a good deal on purchases. The better deal a store can give you, the more likely it will be that you return and spend more money. It is for this reason that retail store credit cards are often worth looking into.

Additionally, it is sometimes easier to open store credit cards than general-purpose cards because many of them allow you to enroll even if you have a bad credit score. Later in this article, we will review one of the best department store credit cards for bad credit.

Department Store Credit Cards

Image Source: Pixabay

With that being said, there are some potential setbacks associated with store credit cards for bad credit that we should mention.

Even some of the best store credit cards come with high APRs (annual percentage rates), as you will see throughout our examples. If you are in debt or will be unable to pay off the balance on department store credit cards, then we would not recommend them due to their high interest rates.

Also, most department store credit cards are closed-loop, meaning you can only use them to purchase goods at their store or at their group of stores. If you need a credit card that will work for you anywhere, you will be less likely to find them here, even among the best store credit cards.

There are some other setbacks associated with store credit cards for bad credit, but we can discuss them on an individual basis later in the article. The best store credit cards all vary in effectiveness and serve some people better than others.

Throughout this article, we will answer some of the most commonly asked questions regarding department store credit cards including the following:

  • What are some of the best store credit cards for both good and bad credit?
  • What are some of the best store credit cards for bad credit?
  • What benefits should I look for in department store credit cards?
  • How can I find stores that have credit cards?

It will be important that you understand the risks and rewards of opening store credit cards for bad credit, and we will lay them out for you as we get to specific examples. Ultimately, the best store credit cards will vary from person to person, and it will be up to you decide which one fits your current financial needs.

We will begin by comparing and contrasting three retail store credit cards before analyzing each on an individual basis. Keep reading for our recommendations.

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Comparison Review List

While there are many department store credit cards for bad credit and good credit to choose from, the three we will focus on throughout this article include:

To get a side-by-side comparison of the benefits of these department store credit cards, turn to the table below. For those of you who would rather focus specifically on just one of the department store credit cards, feel free to navigate directly to our analysis later in the article.

You may shop at one of these stores that have credit cards more than the others, and since it is often difficult to use department store credit cards at other locations, choose a store that is right for a majority of your purchases.



High-Level Comparison Table

Store Credit Cards

Benefits

Annual Fee

Target REDcard™

5% off every day, free shipping

None

Amazon Prime Store Card

Unlimited 5% back, promotional financing

None

Walmart Credit Card

Helps improve low credit scores, store/gas discounts

None

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Target REDcard™ Review


Best Store Credit Cards

Image Source: Target

The Target REDcard™ is one of the best credit cards for purchases, as long as you do a lot of your shopping at Target. As mentioned above, many of these retail store credit cards are closed-loop, such as this one. All purchases made on this card must be at a Target store or while shopping on Target’s website.

With that being said, this is one of the best store credit cards for a few different reasons. The first is that you will get a 5% discount on all of your purchases made at Target. Essentially, by opening one of these department store credit cards you gain access to a permanent sale.

In addition to the 5% discount, you will get free shipping when you make purchases on the Target website. This is another reason we have labeled this a best credit card for purchases if you like to shop at Target. Shipping and handling costs add up quickly when you do your shopping online, but you can conveniently have your purchases delivered free of charge.

In many ways, this is the best credit card for purchases that are meant for everyday use. Since Target sells groceries, clothing, electronics, sports equipment, movies, and more, this is one of the best store credit cards in terms of its functionality. Despite it being closed-loop, you may not have to shop at too many other places when you have department store credit cards like this one.

There are several other benefits associated with opening one of these store credit cards, including the fact that Target will give you an additional 30 days to return any purchases. Additionally, there is no annual fee.

This last point will be especially important. The best store credit cards, including store credit cards for bad credit, will come with no annual fee. While it may not be essential depending on how much of an annual fee they charge, you can always find one that will not bill you simply for opening department store credit cards.

Another important feature of this particular card is that it is one of the few department store credit cards in the United States that is chip- and PIN-enabled.

The difference between chip- and PIN-enabled cards and chip- and signature-cards is that a PIN will greatly increase the security and anti-theft protections. If you are worried about retail store credit cards because of the security measures, you do not have to worry with this one. As long as you create a unique PIN, you will not be charged for any purchases you do not make.

There are a few downsides with opening a credit card at Target, but even the best store credit cards have flaws. For your benefit, we would likely to briefly discuss some of the disadvantages.

As previously mentioned, the card is closed-loop, so you cannot use it to buy similar products at other stores. Additionally, you will find that it comes with high ongoing interest rates, which means it may not be the best store card for bad credit.

The best store card for bad credit will come with slightly lower interest rates. With the Target card, you will be charge 23.15% APR for purchases, plus you will be charged up to $38 for late payments and $27 for returned payments.

If you are capable of paying your bills on time, then these high fees will not affect you, and you may find that this is your best credit card for purchases. We cannot consider this to be one of the best store credit cards for bad credit, however, because it will be difficult to raise your credit score if you cannot make the monthly payments.

By missing a payment, you will owe more and more money until it becomes impossible to cover your purchases plus the interest rates. The best store credit cards for bad credit will work with you to ensure that you cannot only pay off your bills on time but that you will not go into debt if you miss a payment now and then.

On the other hand, this is one of the best store credit cards for people with good credit because these fees should not apply to the same extent. As always, consider how often you shop at Target before enrolling in a credit card with them.

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Amazon Prime Store Card Review


Another example of the best store credit cards is the Amazon Prime Store Card. One of the reasons this is among the best department store credit cards is that it allows you to make your purchases without ever leaving the comfort of your home.

Similar to the Target REDcard™, you will not owe an annual fee, and it comes with some excellent benefits if you do a majority of your shopping at Amazon.

Store Credit Cards for Bad Credit

Image Source: Amazon

When using the Amazon Prime Store Card, you will receive an unlimited 5% back as a statement credit on all of your purchases. Again, this is one of the closed-loop store credit cards, and all of your purchases will be through the Amazon website.

The reason that 5% rewards can make this one of the best retail store credit cards is that Amazon does not have quarterly spending caps. A quarterly spending cap would limit the amount of purchases you can make while also getting the 5% back in rewards.

Since Amazon will give you 5% back on an unlimited amount of purchases, you will reap the benefits no matter how often you use the card. In many ways, this is the best credit card for purchases because you are essentially getting a discount on everything you buy.

There are disadvantages to opening an Amazon Prime Store Card, however, especially if you are looking for store card for bad credit. Similar to Target’s credit card, the APR is high, starting at 26.24%. Again, the high interest rates make it harder to build credit if you do not make your payments on time, which prevents this from being one of the best department store credit cards for bad credit.

Additionally, you will have to become an Amazon Prime member if you want to open a credit card with them. The membership costs $99 and comes with free two-day shipping, whether you open a credit card or not.

Again, we consider this to be one of the best store credit cards if you are making a large amount of purchases on Amazon. The 5% unlimited rewards will help you afford big purchases that may have been out of reach before.

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Walmart Credit Card Review


Unlike the first two cards, the Walmart Credit Card is one of the best store credit cards for bad credit. The reason this is one of the best store credit cards for bad credit is that it is available to people with credit scores as low as 550.

Store Credit Cards

Image Source: Walmart

Most people with a credit score of 550 will have a difficult time opening a credit card or building credit because of financial difficulties. A lot of credit card companies see someone with a low credit score as a financial risk that is not worth taking.

However, this Walmart store card for bad credit gives any number of credit scores a chance to improve. The company reports to all three credit bureaus, as opposed to just one or two if you opened a card with many other businesses.

As long as you pay your statements off on time, this will truly be one of the most helpful store credit cards for bad credit because the credit bureaus will make a note of your on-time payments. This will help you raise your credit score and will make it easier to enroll in even better credit cards in the future.

Another reason this is one of the best store credit cards for bad credit is that the Walmart credit card gives you free monthly access to your FICO credit score. This feature will allow you to keep track of any improvement and any need for improvement in the future.

Additionally, when you sign up, you get 10% cash back on purchases up to $250 on the first day. In essence, this amounts to a $25 sign-up bonus as long as you spend $250 or more.

Depending on which Walmart credit card you choose, your interest rates will vary. Walmart offers three different types of department store credit cards, which range from 17.15% APR to 23.5% on purchases. Compared to most other store credit cards, 17.5% is surprisingly low.

Similar to the others, there is no annual fee. If you make all your payments on time, and you spend a lot of money at Walmart, then this could easily be the best store card for bad credit you can find.



Conclusion: Think about Where You Shop

The truth is, stores that have credit cards want your business. While there are often high late fees and APR interest rates associated with department store credit cards, you can typically earn a lot of cash back on purchases made to a single store.

Remember to look at whether the store credit cards are closed-loop or open, depending on how you want to use it. If you shop at stores for a majority of your purchases, it will not matter if the card is closed-loop. Think about where you shop most and determine if you can buy most of what you need, including groceries, clothes, furniture, and electronics, at that one location.

As always, make sure you read the fine print before settling on department store credit cards. Try to avoid annual fees and excessively high interest rates. If you are looking to build your credit score, make sure that the company reports to all three credit bureaus. As long as you are ready to make the commitment, department store credit cards could save you a lot in the long run.

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