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Should You Open a Retail Store Credit Card to Save Money During Black Friday?

When done right, you can save some holiday shopping money using a store credit card.

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We all know the offer: Would you like to save 5%, 10% or 20% on today’s purchase with a new credit card?

In some cases, saying yes absolutely makes sense. If you were about to spend $2,000 at Target to get all new furnishing for your new apartment or $1,000 on your family’s major holiday gift run during Black Friday, then getting that bonus discount on your first purchase could be a great deal.

But don’t rush and sign up for a store credit card right away. Retail store cards are known for high-interest rates, low credit limits and incentives designed to get you to spend more money overall. But if you can do it right and avoid financial landmines in the world of store credit cards, you could come out far ahead.

For most people, most store credit cards are a bad deal. But when you find the right card that aligns well with your spending, you could be in for some great savings on Black Friday and all year round.

Here’s how to decide if a store credit card is a good idea and some of the best store cards to consider.

When Store Credit Cards Make Sense

Store credit cards only make sense if you are going to save money using one. If you would wind up spending more than just shopping with the card you already use, then you should probably stick with what you have now.

However, as we discussed above, getting a new credit card in a store can save you a lot of money. I’ve made my fair share of cash back from Amazon’s Visa.  And when I was a regular shopper at Kohl’s, I picked up that card as well. In both of those cases, I knew the card would save me money.

Store cards can save money on big-ticket items

Some store credit cards offer big upfront savings with a discount on your first purchase or on purchases for a short period of time. If you’re going to make a big-ticket purchase anyway or have one planned, that is the right time to capitalize on a store card offer and take home hundreds of dollars in savings. However, ff you’re just going to save a few bucks, skip getting the new card right for now.

Some store cards offer continued rewards earnings

The other situation when a store credit card is a good idea is when you will save money by using it on a regular basis. My Amazon card gives me 5% back on most purchases and even more on occasional buys, like when I bought my expensive podcast microphone with 15% back. If you will get 5% back or more on a regular basis, a store credit card is probably a good deal based on your spending habits.

When to Avoid Store Credit Cards

Store credit cards are not all unicorns and rainbows, however. They are notorious for predatory features that can cause serious damage to your credit score or bank account if you’re not careful.

Store cards charge high interest

First, most retail store cards charge very high interest rates. If you are not going to pay off the card in full every month by the due date, you are better off avoiding putting a purchase on a credit card.

Missed and late payments are the fastest way to ruin your credit score for years, so always pay on time. But store cards are often available to people with less than stellar credit. On the flip side, you may be able to use one responsibly to build your credit too. If you treat your credit card like a debit card and only pay for what you can really afford within your budget, you’ll be in good shape.

They also have low credit limits

Store credit cards typically offer low credit limits in most cases. Your total credit utilization across all cards is a major factor in your credit score. If you have only a few cards and max out a store card, it can sink your credit rating fast.

They can impact your ability to qualify for mortgage loans and auto loans

If you’re getting a mortgage or car loan soon, think about skipping all new credit applications for six months to a year in advance. New credit applications and accounts can temporarily hurt your credit. This could lead to higher interest rates or getting denied for the loan altogether.

The Best Store Credit Cards to Consider

While they usually don’t offer the best sign-up bonuses or save you money on interest through balance transfers, sometimes store cards makes sense. Here are a few of my favorites.

Amazon Rewards Visa Card

The Amazon Rewards Visa card is issued by Chase and comes in two different versions. If you are not a Prime member, you get 3% back at Amazon and Whole Foods. With Prime, you’re upgraded to the Amazon Prime Rewards card with 5% back at Amazon and Whole Foods. Both include 2% back at restaurants, gas stations and drug stores and 1% back everywhere else. It has no annual fee.

Costco Anywhere Visa® Card by Citi

The Costco Anywhere Visa Card is a credit card from Citi made exclusively for Costco members. It comes with 4% cash back on up to $7,000 in annual gas purchases (and then 1% after), 3% back on restaurant and travel purchases, 2% back at Costco and Costco.com and 1% everywhere else. Aside from the $7,000 caveat, there are no other limits on what you can earn with this card.

Capital One® Walmart™ Rewards Mastercard®

The newly refreshed Capital One Walmart Mastercard gives you 5% back at Walmart for your first year when you pay with Walmart Pay. You get 5% when you use the card at Walmart.com, the Walmart app and Walmart’s grocery pickup and delivery service. You get 2% back on other purchases at Walmart and at Murphy USA Fuel Stations, plus restaurant and travel purchases. You get 1% back everywhere else. This card has no annual fee.

Target RedCard™

The Target RedCard features 5% back at Target and Target.com for most purchases. It also gives you an upgrade to free two-day shipping on many purchases, an extended 30-day return and exchange window and other perks.

Verizon Visa® Card

If you’re a Verizon customer, then you should know about the Verizon Visa® Card. You wouldn’t think that a credit card co-branded with a major telecommunications company would be a heavy-hitter with rewards, but the Verizon Visa Card is a unique product designed specifically for Verizon customers. The card offers up to 4% back on everyday spending categories, plus a statement credit and discounts on your Verizon bill.

Skip the Store Card Entirely

Of course, you don’t have to use a store credit card when you go to the store. Top credit cards for shopping any time include the Chase Freedom Flex℠ Card for 5% back on rotating bonus categories, Chase Freedom Unlimited® Card for unlimited cash back or the Citi® Double Cash Card for an unlimited 2% cash back.

If you’re looking forward to your first post-pandemic vacation, consider a travel rewards credit card that offers strong earnings for shopping. For travel rewards, the Bank of America® Travel Rewards credit card is a great choice for your shopping trips with nearly double travel points per dollar on every purchase.

Be Smart with Your Credit and Your Credit Cards

When used well, credit cards are a gateway to cash back and travel rewards from purchases you would already make. But if you use them as an excuse to spend more or get stuck in a trap of high interest rates, you’re better off with cash or debit.

For most people, most store credit cards are a bad deal. But when you find the right card that aligns well with your spending, you could be in for some great savings on Black Friday and all year round.

While we work hard on our research, we do not always provide a complete listing of all available offers from credit-card companies and banks. And because offers can change, we cannot guarantee that our information will always be up to date, so we encourage you to verify all the terms and conditions of any financial product before you apply.

Eric Rosenberg
Eric Rosenberg is a finance, travel, and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full-time. He has in depth experience writing about banking, credit cards, investing, business, and other financial topics. When away from the keyboard, Eric enjoys exploring the world and spending time with his wife and little girls. You can connect with him at Personal Profitability or EricRosenberg.com.

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