The In-Store Credit Card: A Credit Trap or Financial Blessing?

Credit cards are such a popular financial tool that around 170 million Americans have one. In addition to the run-of-the-mill credit cards like Visa or Mastercard, you can also get a dedicated in-store credit card from many stores.
For those new to credit cards, you might question whether an in-store card is a credit trap or financial blessing. Keep reading and we’ll cover some of the pros and cons of store credit cards.

Build Credit

A store card is one way you can build your credit score if you use the card responsibly. You can often get a store card more easily than a traditional card, so it often proves a gateway for credit building among those with poor credit or no credit.

Get a Discount

If you shop at a particular store on a regular basis, a store card can actually save you a little money. Many store credit cards get you an automatic discount on all purchases at that store.

So, for example, if you do most of your household shopping at a big box store, that store’s card can cut down on your grocery bill. The trick is that you must pay off that balance before interest starts accruing on the bill.

It Can Affect Your Credit Score

A pitfall of even applying for a store card is that it racks up something called a “hard inquiry” on your credit report. Each hard inquiry costs you something off your overall credit score.

If you apply for several cards, it can reduce your score a lot because it makes you look like a credit risk.

Limited Usefulness

For most store cards, you can only use the card for purchases at that specific store or chain of stores. That limits their usefulness.

A card at a retail outlet may prove more useful because of their wide selection. You should only get a card at a specialty store if you’re absolutely sure you’ll use it. A store card at a home improvement store, for example, doesn’t benefit you much if you only do one or two home improvement projects a year.

High Interest Rates

Another big pitfall of store cards is that they commonly carry very high interest rates. The average APR for most credit cards is about 17%. The interest rate for store cards often tops 24%.

You can learn more about store card interest rates by reading this guide.

Parting Thoughts on the In-Store Credit Card

An in-store credit card can prove either a credit trap or financial boon depending on a few factors.
A card at a store you shop at regularly can save you money with an across the board discount. It can also help you build your credit history.

With their high interest rates, however, using the card for frivolous purchases can end up costing you a lot of money. You also get limited usefulness out of the cards because you can only use them at the one store.

Struggling with your level of debt? Check out our post on tips for getting out of debt.


Jasper reports and writes about sports, the Internet, tech, social media, and other topics from

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