Pros and cons of department store credit cards

Category: Credit Cards


Are you considering a department store credit card? Before you decide to apply for a department store credit card, you’ll want to carefully weigh the advantages and disadvantages of these types of credit cards. Because you want to avoid opening up too much credit and every credit inquiry can be a negative mark against your credit score, you’ll want to consider anything you apply for. Some pros and cons of department store credit cards include the following:

Easier approval

Whether you’re establishing your credit for the first time or you’re looking to rebuild it after many years of poor credit, it can be difficult to qualify for a traditional credit card, depending on your specific credit history. There are some options for people with bad credit who want to rebuild their credit and open up a new credit card account; secured credit cards are an option worth considering. A department store credit card can also potentially be a good entry-level credit card, as many department store credit card programs tend to have more lenient terms and conditions when compared to other available credit cards. As such, if you don’t have credit or you have poor credit, you might have better luck with a department store credit card.

Low limits 

It will depend on a few things, including the specific department store and your credit history, but you’ll likely have a low credit line when you go with a department store credit card. Depending on how you look at it, this can be an advantage or a disadvantage. If you don’t have much available credit, it can be much easier to max out your credit card, which isn’t good for your credit score. And because you should only focus on one credit card as you rebuild or establish credit, you may not want your only credit card to have a low limit. On the other hand, a low credit line means you can’t get into as much debt. Spending your entire credit line might not be good for your credit score, but if it’s very low, at least you won’t have to worry about getting into a substantial amount of debt. 

Rewards and perks

Do you shop at the same department store very frequently? If so, you would likely benefit from the exclusive perks and rewards that you would receive as a cardholder. Every department store credit card offers its own benefits to customers, but common examples include points that that can be redeemed for in-store dollars, exclusive discounts, and previews to special events and sales.

Limited use

As previously mentioned, applying for credit will have an impact on your score and you should be very selective on the credit cards you apply for. Something to consider is that if you plan on only applying for one credit card, applying for one that only limits you to that one store may not be ideal. However, if you’re torn between several department store credit card programs, find out if any are also MasterCard/Visa cards. If you open up a store credit card that is also a Visa or MasterCard, you can use it anywhere that those major credit cards are accepted, while also being able to take advantage of those special in-store perks as a cardholder.

High interest rates

A huge disadvantage to seriously consider about department store credit cards is that they tend to come with some of the highest credit card APRs out there. Even if your credit is good, you’ll likely have a much higher interest rate on your credit card if it’s a department store credit card.

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Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.

Tags: credit card rewards, Credit Score, discounts, establishing credit, shopping

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