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Toys R Us Credit Card: Is It Right for You?

Dec. 6, 2016
Credit Cards, Rewards Credit Cards
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Toys R Us Out of Business

Toys R Us and its sister store Babies R Us announced in March 2018 that they were going out of business. Some customers who carried Toys R Us store-branded credit cards have reported being informed by the issuing bank, Synchrony, that their cards would be replaced with a general cash-back credit card. As of April 2018, though, Synchrony had not provided public details of its plans for Toys R Us card accounts.

Toys R Us, the country’s largest specialty toy retailer, accepts MasterCard, Visa, Discover and American Express credit cards, in addition to its own store credit cards. It offers two store-branded credit cards that provide rewards to those who shop regularly at Toys R Us and its sister store, Babies R Us.

In the Nerds’ analysis, these cards are worth considering if you already spend a lot of money at Toys R Us or Babies R Us. The exceptional rewards rate for store purchases exceeds what you’d get on any bank credit card.

What Toys R Us credit cards are available?

Toys R Us offers two credit cards:

  • The “R”Us Credit Card: This is a store card, accepted at Toys R Us and Babies R Us, both in-store and online.
  • The “R”Us MasterCard: This card is accepted anywhere that takes MasterCard.

These cards earn points in the retailer’s Rewards”R”Us program. Points are worth 4 cents apiece in the form of “R”Us Rewards Dollars. You can start redeeming at 125 points, which is worth $5.

  • Cardholders get 2 points for every $1 spent at Toys R Us and Babies R Us. At 4 cents apiece, that gives the cards an effective 8% rewards rate.
  • If you have the “R”Us MasterCard, you earn an additional 1 point for every $4 you spend on purchases outside of Toys R Us and Babies R Us. At 4 cents a point, that’s a 1% rewards rate.

Toys R Us credit cards also give you the option of deferred-interest financing for six months for purchases over $299, and 12 months for purchases over $749. However, you don’t earn points on purchases that you finance this way.

It’s important to understand how “deferred interest” works. When a card offers deferred interest, it’s not waiving the interest. Rather, it’s setting it aside until later. If you pay off your purchase by the end of the deferred-interest period, you’re fine. But if you carry a balance past the end of the period, you’ll be charged interest on your entire purchase, going back to the day you made it. And the interest rate on Toys R Us credit cards is high: 26.99% as of November 2016, according to Synchrony Bank, the card’s issuer.

» MORE: The dangers of deferred interest

Toys R Us credit cards come with other perks that can be attractive to the right person:

  • 15% off your first purchase upon opening the card.
  • 10% off in-store purchases on Thursdays through March 30, 2017, subject to restrictions. (For example, it doesn’t apply to video game systems, laptops, tablets and certain brands.)
  • Up to 10% back on purchases made from your Babies R Us gift registry.

Should you get a Toys R Us credit card?

The 8% effective rewards rate on purchases at Toys R Us and Babies R Us make these credit cards outstanding for someone who already does a lot of shopping at these stores. It’s especially helpful for new parents faced with buying all the equipment standard to 21st-century parenting — car seat, stroller, high chair, bottles, blankets, diapers, diapers, diapers. Rewards points are good only at Toys R Us and Babies R Us, of course, but parents should have ample opportunity to redeem them.

The rewards make these cards an attractive alternative to paying with cash at Toys R Us and Babies R Us. And that’s the way you should use them — to buy only those things that you can afford to pay off in full when your credit card bill comes. When you pay in full, you won’t get charged interest. When you carry a balance from one month to the next, though, interest kicks in, and with a 26.99% APR, it’s going to kick hard.

Alternatives to a Toys R Us credit card

No other credit card is going to rival the rewards rate available on a Toys R Us credit card for purchases made at Toys R Us and Babies R Us. However, you can do better than the 1% rate that the “R”Us MasterCard offers for purchases elsewhere. Consider pairing a Toys R Us credit card with one of these no-annual-fee cash-back cards:

The Blue Cash Everyday® Card from American Express is a great choice for parents, as it offers high rewards rates on some of the most common purchases for families. It gives you 3% cash back at U.S. supermarkets (on up to $6,000 a year in spending, then 1%), 2% at U.S. gas stations and select U.S. department stores and 1% everywhere else. Rewards can be redeemed for credit on your statement. There’s also a nice offer for new cardholders: $150 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months. Terms Apply.

The Citi® Double Cash Card – 18 month BT offer gives you 1% cash back on every purchase, plus another 1% back when you pay them off. Reward redemption options include a statement credit or check, and there’s a $25 minimum. Though many top rewards credit cards require you to have excellent credit, you can qualify for the Citi® Double Cash Card – 18 month BT offer with only good credit.

The Chase Freedom Unlimited® gives you a flat 1.5% cash back on every purchase. You can redeem rewards in any amount for statement credit or a direct deposit into a bank account. This card comes with a solid sign-up bonus: Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening. And if you want to finance a major purchase, it comes with an introductory APR of 0% on Purchases and Balance Transfers for 15 months, and then the ongoing APR of 16.74% - 25.49% Variable APR.

IF YOU HAVE AVERAGE CREDIT

The Capital One® QuicksilverOne® Cash Rewards Credit Card gives you 1.5% cash back on every purchase. There’s no sign-up bonus, however, and there’s an annual fee of $39. Since this is a card for those with only average credit, the interest rate is high: The ongoing APR is 24.99% Variable APR. Make your first five payments on time, and Capital One may raise your credit limit.

» MORE: NerdWallet’s best store credit cards

Paul Soucy is an editor at NerdWallet, a personal finance website. Email: paul@nerdwallet.com. Twitter: @paulsoucy.