5 Reasons Not to Apply for Department Store Credit Cards

What do you say when a cashier asks you if you want to apply for the store’s credit card? First, you should say, “Maybe.” Then you should do the math.


Seems like every time you visit some stores – especially department stores – you’re asked if you’d like to sign up for the store’s credit card. While I used to consider these offers – and occasionally accept them – I’ve now concluded it’s almost never a good idea to apply at a store. Here’s why…

  1. Opening a line of credit isn’t an impulse decision. Before you choose to open an account, shop around. Or at least take the time to understand its terms and conditions. The checkout counter at a department store isn’t the best time or place to do that.
  2. You might not be getting the best sign-up bonus. When signing up for a store credit card, you may be offered 10 percent off your purchases or perhaps some free merchandise. But is that really the best deal out there? I’ve been offered store credit cards just for a one-time savings of 10 percent on purchases that were under $100 – a negligible sign-up bonus by credit card standards. By taking the time to research competing offers, you may find some incredible sign-up bonuses that you’re missing out on. Since you can’t apply for every credit card out there, you should only choose the ones with the most competitive sign-up bonus offers.
  3. You don’t really need a store’s credit card. You can’t have a credit card for every retailer you visit, so why even try? The credit cards you choose to carry are an important financial decision. Choose the ones with the lowest rates and fees or the best rewards. Just having a store card because you shop there occasionally isn’t an important consideration.
  4. Having a store card limits comparison shopping. Store credit cards are all about encouraging customers to return by offering rewards. This causes some customers to ignore better prices at competing retailers.
  5. Store cards don’t have the best terms. You may intend to pay all your balances every month, but sadly, many people don’t. Store credit cards aren’t known for their low fees or competitive interest rates, so it’ll pay to shop around for other credit cards.

When you should apply for a store credit card

Although there are many good reasons to avoid store credit cards, they can still make sense in some circumstances.

For instance, some friends of mine purchased a new home and needed several thousand dollars’ worth of appliances. After shopping around, they decided to buy from a large home-improvement store that was offering a great deal and free delivery. They’d also investigated the store’s credit card before applying. They ultimately concluded that the terms of the card were acceptable, and the discount on their large purchase was worth taking out a new line of credit.

If you do the same, you can make money from a store card – instead of the store making money off you.

Stacy Johnson

It's not the usual blah, blah, blah

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