Store credit cards are great for two reasons: 1) They are a good way for people with little to no credit history to apply for and get approved for a credit card, and 2) They usually come with great rewards for that retailer. The drawbacks are that these cards come with high interest rates (often 20% or more), high fees, and a low credit limit.
I almost always recommend store credit cards for people who are starting off building their credit history or for people with bad credit, since these cards are often very easy to get. Retailers are notorious for approving these cards for teenagers who have no or limited credit history. Store credit cards are also a good way to get a bigger discount at stores that you shop at regularly and earn rewards.
List of Store Credit Cards (Top 25)
|BP||Saks Fifth Avenue|
|Crate & Barrel||Shell|
|Home Depot||TJ Maxx|
What To Consider Before Applying For Store Credit Cards
Store cards are a great way to build credit, but you should consider a few things before applying.
- Store cards can only be used at one retailer (unless you get a credit card version like Visa, MasterCard, or American Express, which can be used at other stores)
- Store cards often have high interest rates as high as 20% or 30%, which can erode most of the discount or savings you get if you carry a balance
- Store cards are usually very easy to get for people with a low credit score, but usually the minimum is 640 or 650. If your score is lower than that you should consider waiting to apply until your score increases.
- The rewards that you earn from store credit cards is great, and can often exceed cash back credit cards, but these cards are designed to get you to shop at that retailer more often, and to spend more money when you do, so you may end up spending more than you otherwise would.
The Macy’s Card is a one of the best department store cards in terms of coupons and rewards. They regularly send card members a set of 4 coupons once or twice a quarter. The coupons are almost always a mix of $20 off a $50 purchase, or $10 off a $30 purchase. Macy’s will also include a 20% off coupon that can be reused for all purchases on the same day as well. Macy’s used to be very restrictive about these coupons, but I have noticed recently that they have scaled back the restrictions to the point that even brands like DIESEL and Armani that are specifically excluded on the terms and conditions on the back of the coupon are eligible to be purchased using a coupon if the item is on sale or clearance. The Macy’s card also earns 1% back in savings passes with each purchase. This is a horrible return, but the coupons are what make the card one of the most valuable department store credit cards. Finally, Macy’s has one of the most flexible return policies. They will allow you to return items up to one year after purchase, even without a receipt if you purchased the item using your Macy’s Card.
The Kohls card is great for people who buy a lot of stuff from Kohl’s. They send out coupons to to cardholders several times a year and if you spend over $600 in a year at Kohl’s you will earn Most Valuable Customer (MVC) status, which allows you to receive at least 18 exclusive discounts annually. Sometimes these coupons can be quite generous including discounts up to an extra 15-30% off sale and clearance items. In addition to the coupon savings you will also earn Kohl’s points for every purchase made with the card.
The Nordstrom Card is not great in terms of coupons and earning rewards, but it does come with a nice hidden feature that some will find valuable. As far as coupons go, you will receive a $20 bonus note after you make your first purchase of $100 when you sign up for the card. You will also earn 2 rewards points per dollar for all purchases at Nordstrom, Nordstrom.com, and Nordstrom Rack. Nordstrom also holds events a few times per year where you can earn double points for purchases. As I said before the rewards earning potential for this card is awfully low and limited, but what makes this card stand out is the fact that you can get up to $100 in free alterations every year for clothing purchased using this card. I often find myself having to get jeans and slacks hemmed by a tailor, which usually costs me $15-20 for each pair. Getting free alterations at Nordstrom is a welcome benefit, and a feature that differentiates this card offering from other department store cards.
Target Card (REDcard)
The Target Card has the best cash back earnings among the best department store credit cards. The card offers 5% off all purchases made at Target and paid for using the REDcard. This is a very simple and straight-forward card benefit, which makes this card stand out. Although not specifically called out in their card marketing materials and website, cardholders will also receive coupons in the mail for dollar off and specific items. The coupons are not nearly as generous as Macy’s or Kohl’s, for instance $5 off a $20 purchase, but are another added benefit of the card. Finally, Target will extend the amount of time that you have to return items purchased with the card by 30 days. Most items can be returned within 30 days regardless of method of payment, so this card will allow returns up to 60 days from purchase.
Banana Republic Card
While the Banana Republic card is not necessarily a department store credit card, I included this on the list because of it’s tremendous rewards earnings, and the fact that most people shop at department stores for clothing, so a clothing and fashion retailer would be relevant on this list. The Banana Republic card offers 5 points per dollar at purchases at the Gap family of stores including Banana Republic, Gap, Piperlime, and Old Navy. Every 1,000 points earns you a $10 reward certificate, which equates to 5% earnings. If you spend over $800 at Gap stores in a year you will also qualify for “Luxe” status, which not only grants you a special Banana Republic Luxe Card, but you also get:
- Unlimited free alterations for items purchased using the card
- Free online shipping
- Access to free in store events
The free alternations is valuable to me for the same reasons mentioned above, but I must point out that Banana Republic does not limit the amount of alterations at $100, so you could theoretically get much more value out of this benefit. In addition, Banana runs a lot of sales and I have often found khakis or slacks on sale for $10-20, which they altered for free and without question.
Summary of The Best Department Store Credit Cards
While most people probably don’t need or ignore department store cards. The 5 mentioned in this post are great ways to get an additional discount at merchants you regularly shop at and are a good way to build credit for someone who doesn’t already have a strong or lengthy credit history. These department store retailers continue to change and enhance these card offerings in order to make them more competitive, so it is always a good idea to continue to see what new features and benefits they introduce to these cards.