Store Credit Card vs. General Card: Which Type of Rewards Card Is Best?
Store cards have greatly improved and can sometimes be a better choice, especially if you shop there a lot.
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Conventional wisdom used to be that store credit cards weren't always ideal for consumers. This was in part related to their often limited acceptance outside of a specific brand, as well as their high interest rates, low credit limits, and mediocre rewards and redemption options.
But at least on that last point, conventional wisdom is shifting. Many store cards have stepped up their game in recent years in an attempt to become top-of-wallet options for everyday spending — and not just with a specific brand. A few of our favorites include Amazon's Prime Visa and the Costco Anywhere Visa® Card by Citi.
Each of these cards offers elevated rewards at the stores they're tied to, but they also reward you fairly well for spending outside of the brand. And you can redeem those rewards for more than just store credit or merchandise. These features make them more competitive with general rewards credit cards that aren't tied to any specific merchant.
As such, it may be time to give store cards a closer look. Some can help you save money without much of a downside, as long as you pay them off on time each month. Here's a closer look at some of our favorites:
🤓Nerdy Tip
Store credit cards may still feature higher APRs and lower credit limits than general rewards cards — but this also typically makes store cards easier to qualify for applicants with fair credit (FICO scores of at least 630). General rewards cards tend to require good to excellent credit (FICO scores of 690 or higher).
In January 2017, Amazon and Chase launched the popular Prime Visa. It requires an Amazon Prime membership, which costs $139 a year, but the card carries a $0 annual fee. And its rewards are among the most generous you'll find on a store card: 5% back at Amazon and Whole Foods Market; 2% back at restaurants and gas stations, plus local transit and commuting (including rideshare); and 1% back on all other purchases. Rewards can be redeemed at Amazon or for cash back, travel, or gift cards. If you shop at Amazon frequently and are already a Prime member, it's hard to beat.
The Target Circle™ Credit Card is a closed-loop card, meaning it can be used on eligible Target purchases only. But there is an open-loop Mastercard version, which can be used virtually anywhere. Regardless of which version you have, you'll get a 5% discount applied to eligible Target purchases at checkout, plus a 10% discount once a year when you sign up for Target’s marketing emails. The card also entitles you to free standard shipping and 30 extra days to make returns. The annual fee is $0. For Target shoppers, it's all upside.
The Costco Anywhere Visa® Card by Citi gives cardholders 5% back on gas purchases at Costco and 4% back on other eligible gas and EV charging purchases (on up to $7,000 of annual spend, then 1%), Cardholders also earn 3% back on restaurants and travel, 2% back on all Costco purchases, and 1% back on everything else. While there’s no annual fee, you must have a Costco membership to get the card, and that starts at $65 a year. Another drawback is that cardholders receive their cash back rewards just once a year, at the end of the February billing cycle. But it's a great choice for Costco members who spend a lot in the card's bonus categories.
The Gap Good Rewards Mastercard® Credit Card earns 5 points for every $1 spent at Gap brands, whether it’s in-person or online. Through January 2023, you'll also earn 5 points per $1 spent on all other purchases. After that, you'll earn 1 point. Redemption options are somewhat limited, but for frequent Gap shoppers that won’t be a problem: Points are worth 1 cent each and can be redeemed at any Gap brand, which includes Athleta, Old Navy and Banana Republic. The card also tends to feature various discounts. The annual fee is $0.
The Verizon Visa® Card offers 4% back on dining, grocery store purchases and gas; 4% back on Verizon purchases (excluding your monthly phone bill); and 1% back on everything else. Despite that paltry rate on your monthly Verizon bill, you're getting super-rich rewards in some major everyday spending categories. True, you must be a Verizon or Fios customer to be eligible for this card, but those rates can add up to a lot of savings. The annual fee is $0.
The MyLowe’s Rewards Credit Carddoesn't feature rewards in the traditional sense. But much like the Target Circle™ Credit Card, it offers 5% off all eligible purchases within its brand, making it potentially valuable to frequent Lowe's shoppers — especially when making a large home improvement-related purchase. As with the Target Circle™ Credit Card, it's a closed-loop card, which means you'll need something else for your everyday purchases. The annual fee is $0.
Of course, this doesn't mean a store card is always the best choice. If you tend to shop at many different retailers without a clear favorite, then a general cash back card that earns 1.5% or 2% back could be the better option for your everyday purchases.
And if you are carrying any balance at all, then it makes sense to focus exclusively on finding a card with the lowest interest rate possible instead of on rewards.
Also, the conventional wisdom isn’t always wrong: Some store cards still do have those big downsides, in the form of high APRs, high fees or redemption inflexibility. You may also find you have fewer protections on purchases.
In general, though, store cards that offer the kind of rich rewards as those above can be worth pursuing, especially if you shop at that store often.
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