It may be tempting to impulsively sign up for a store credit card to get a quick discount, but you can get more out of your rewards — and avoid big interest charges — if you’re strategic.
If you’re a regular shopper at a store with a rewards card, opening a store credit card can be worth it if the rewards are enticing enough. “Instant savings on almost everything you buy is a must,” says Matthew Coan, owner of financial website Casavvy.com. He recommends looking for savings of at least 5 percent, because general rewards cards usually offer 1 or 2 percent off.
And if you’re planning to open a store card to get a discount on a single big-ticket purchase, like major home appliances, look for a card that “offers a grace period on payments and deferred interest or a zero-percent interest rate for an extended period of time,” says consumer saving expert Andrea Woroch. That way you’ll be able to pay off the balance before you’re charged interest, which, given the frequently high APRs of rewards cards, could cancel out the discount.
If you’re shopping around for a store credit card, we’ve narrowed down the standouts. When it comes to rewards, special offers, and convenience, these are the best store credit cards.
If you have an Amazon Prime account, you’re eligible for the Amazon Prime Store card, which offers 5 percent back on all purchases made from Amazon and no annual fee. For an Amazon Prime member who does most online shopping through the site, this card is a good fit, Woroch says.
You also have access to special financing, meaning you won’t rack up interest if you pay off your entire balance in six to 24 months (the time frame depends on the cost of your purchase).
This card has a fairly high variable purchase APR of 26.24 percent, so be especially diligent about paying off those balances.
Gap (and Athleta, Banana Republic, and Old Navy)
The branded GapCard gives you five points for every $1 you spend at Gap, Old Navy, Banana Republic, or Athleta. For every 500 points earned, you’ll receive a $5 reward card. Put another way: Spend $100 at the Gap family of stores, get a $5 reward.
In addition to rewards, Gap cardholders get 15 percent off their first purchase and 10 percent off every Tuesday at Gap and Gap Factory, both in-store and online.
Gap cardholders who earn 5,000 points in a calendar year are upgraded to the Gap Silver credit card, which comes with a quarterly 20 percent rewards bonus, free shipping for online purchases, free basic alterations on Banana Republic items, and access to special events.
There is no annual fee, but it’s best to pay off the card each month — the variable APR is 24.99 percent.
Calling all DIY and home improvement junkies: Lowe’s cardholders can get 5 percent off everything at Lowe's.
You can also choose to save money on interest by swapping your 5 percent rewards for six months of zero interest on purchases over $299.
The Lowe’s card does not carry an annual fee. But if you choose the financing option and don’t pay off your balance when the intro period ends, you’ll be charged with retroactive interest, and the standard APR is 24.99 percent.
The Target RedCard credit card is especially popular because you can basically buy anything at Target: groceries, health and beauty products, baby gear, clothing, electronics, and home goods, Woroch says.
The card does not charge an annual fee, and cardholders get 5 percent off everything they buy, even if the items are already on sale. The card also comes with free shipping and an extra 30 days on the return policy for most items.
There’s no annual fee, and the variable APR is 23.15 percent. Due dates are at least 25 days after the close of each billing cycle, giving you some time to avoid interest entirely if you pay your entire balance down by each month’s due date.