The Benefits of Signing Up for a Store Credit Cards

There are benefits of signing up for store credit cards. In fact, there are a lot of benefits of taking on credit cards if it is done properly. The big question is does a store credit card build credit?

The benefits of signing up for store credit cards may not seem important, but they can be if the individual handles it properly. There are numerous benefits and numerous cons associated with every decision that anyone ever makes.

hands holding credit card

Here are the Benefits

Financially, credit cards can be good for people. Firstly, there is no way to survive in today’s market without credit. It’s sad for some people because you can’t buy anything without credit and you can’t get credit without buying anything. The issue here for a lot of people is it seems like a revolving door. There are ways to fix this.

The best part of starting a credit history is the credit life has begun. It’s a low-risk credit card and it starts a credit history off on a fairly risk-free start. That’s not to say it is risk-free, but it’s a lot less volatile than the market and run of the mill credit cards.

There are at least two variations of store credit cards. There are closed-loop cards which are only usable at the store that represents it. These variations of credit cards can’t be used outside of the franchise, they seem to be easy to get by people with low or very poor credit scores. Why? Well, the stores don’t want to tell devoted shoppers that they won’t get the card. They could easily lose business.

Private-label retail cards are much safer because they can’t be used anywhere else. It is beneficial for people that lack self-control. It would be even better if people got these private-label cards at stores they don’t frequent. If it’s a store that the individual only goes to once every few months, it will help with the self-control and limit any possible damage for “shopaholics.”

This version of store credit cards can be used at practically any store. This is a lot like a typical credit card.Unfortunately, underwriting standards on supported accounts are the same as standard credit card products, so credit seekers with poor credit history certainly won’t obtain them.

After Credit History Is Started

After the credit history has been established, the store credit cards help build credit. This is key once the credit history has been established. Building credit store leads to bigger and better things like houses and cars.

People trying to create or boost a credit history will find it beneficial to have a store credit card. Retail store card issuers most certainly prefer people with reduced credit scores, this makes it a better option to build credit early on. Ensure that you don’t carry a balance on the card, otherwise, your credit will suffer.

There is the key. Don’t carry a balance on these cards. Of course, credit card companies love to have the user pay the minimum balance because they get the maximum interest rate paid by their company.

Some people would recommend paying the minimum balance, but on store credit cards, don’t carry a balance. If an individual purchases something with that card they can then pay off the card right at the register at a lot of stores in the very next transaction.

There are “permanent” effects of using store credit cards. You can boost the points of your credit score. Using these credit builders infrequently and making sure your balances remain very low can shrink your debt-to-credit limit ratio, which makes up nearly a third of your very young credit score.

Of course, there are perks to have store credit cards. They can give special bonuses and discounts at the store when an individual uses their credit card. These incentive programs usually are the things to entice the individual into applying for the store credit card.


There are cons that counterbalance the perks of taking on store credit cards. Cons come along with financial “investments” like credit cards each time.

Percentage rates on store credit cards are the first of the cons. They are starkly higher on average over standard credit cards.

There was a fairly new survey issued by The survey discovered that the standard APR on credit cards from large stores was 24.99 percent. That is much higher than the average for credit cards from variable-rate issue cards. Those rates are typically near 17%.

This is a killer for undisciplined shoppers. They tend to not pay off the balance 100% off and then they start accruing a lot of interest. That interest can send the balance past the limit of the card rather quickly.

Again, do not carry a balance on store credit cards.

The low limits can be harmful to the individual’s credit score. Obviously, everyone has heard of the debt to credit ration. The debt to credit ratio has a lot to do with carrying a balance, which harms the credit score. In fact, the ratio is 30% of the credit score.

The low limits make it much easier to use the fullest extent of the credit available to the individual.

“If you have a $300 credit limit and you put $200 on (the card), your credit utilization is going to be high,” says Beverly Harzog, author of “Confessions of a Credit Junkie: Everything You Need to Know to Avoid the Mistakes I Made.”

And utilization isn’t the only factor that to consider. Each card application will also generate a hard inquiry on your credit report.

Should an individual apply for a store credit card?

Obviously, that is all up to the individual. Usually, it is more beneficial for younger credit obtainers. It helps establish that credit history that people need when they start their life financially.

If the individual knows they can pay off the balance every month and can be disciplined, they should apply and make sure they take advantage of the easy credit booster.

The individual needs to remember to NEVER miss that first payment. They could end up having to deal with late fees, more interest, and possibly penalty fees. If there is a missed payment it could possibly ruin your credit by 80 points. This depends on your credit score, of course.

Remember, credit cards are there for sparing and emergency use. If the account needs activity every month, use the store credit card once per month on something that isn’t very expensive and pays it off immediately.

Does a store credit card build credit? It sure seems that way for disciplined shoppers.

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