Best Store Credit Cards for Bad Credit

Written by Robert Ferry on November 18, 2021
Best Store Credit Cards for Bad Credit

The last decade has seen an increase in demand for shopping at brick-and-mortar stores of various brands. Due to the pandemic, there was an upsurge in the amount of online shopping as physical stores were not accessible. People who are fond of shopping and buying clothes that meet the latest fashion have been asked at some point to open a store credit card.

The salesmen usually provide some lofty assurances in order to lure customers to sign up for their store’s credit card. Normally, the promises include fixed discounts on the purchase that would lead to incredible savings at the end of the customers. But these salesmen leave out the part where these cards affect the credit of the customer. 

Quite often, it is witnessed that store cards do not offer individuals the same thing that the salesmen promised. For them, it is a marketing strategy to sign up as many customers as possible by offering minimal rewards in terms of discounts. But for customers, it is no less than a trap and a financial burden on them acting as their liability. 

Most people that sign up for such cards do not realize how this will adversely impact their credit scores. As a result of a shopping frenzy, they sign up for the card, and in return, they build up bad credit. People often get addicted to shopping and pay for everything through credit cards. This is carried out without thinking straight about how they will manage their bills and debt on time.

This article will take a look at what are store credit cards, the impact of these cards on credit, a report from people using a retail store credit card, etc. The article will further compare the difference between a store card and a credit card. Moreover, the article will highlight other options available instead of store cards.

What is a store credit card?

A store credit card is issued by retail stores for the sole purpose of attracting people to become their long-term customers. In an act to attract them, these cards offer some incentives to the customer such as discounts, rewards in terms of points earned, and so on.

A retailer credit card can only be used at the store that issued it. This means that if an individual signed up for a store card, they could only use it at this specific retailer. Although, there are some big brands that offer retailer credit cards that look a lot like a traditional credit cards from banks and other financial institutions.

Big retailers offer such kinds of store cards that are co-branded Visa or Master cards. For instance, Amazon, which is one of the largest online stores used for various kinds of shopping, offer not only Amazon retailer credit card for its prime customers but also provide another type of credit card. This credit card is called the Amazon Prime Rewards Signature card, and this card is acceptable at any place that accepts a Visa card fore transactions. Most individuals prefer to have the latter card because it provides them with the convenience to use it not only at Amazon but at other places where a Visa card is acceptable.

Retailers across the world get themselves in business with various banks around the globe in order to offer such attractive lines of credit to customers that are interested in buying a loyalty card for discounts and exclusive offers. These offers are only for those customers that have a retail card for that store.

Store cards act as a beacon for customers to follow the ‘buy now, pay later’ strategy. Moreover, customers do not need to carry ample cash with them, which good thing according to some people that prefer to have less hassle time at a store.

Difference between a secured credit card and a rewards credit card

There are several differences that lie between having a store card and then opting for a credit card from a certain bank or credit union.

In a broader context, a store card can only be used at a particular store, whereas a credit card from a bank or any financial institution can be used at any place where credit cards that include Visa and Master cards are widely accepted.

While credit cards from banks or credit unions offer a decent credit limit for their customers, the credit card of stores generally has a restricted credit limit that needs to be paid off before any further purchase from the store. This acts as a hectic process demanding to pay off debt due to lower credit limits.

 Despite offering a reward scheme, store cards charge higher interest on the balance kept within the retail card as opposed to a credit card of a bank. So when a consumer buys something from the store by using the store card to pay for it, the interest is directly charged, and the amount is deducted by the bank that is co-partnered with that retailer. Hence, this is exactly like a traditional credit card. And just with that Visa or Master card, the debt should be paid off in due time for the retail cards.

Retailer cards can be applied with much ease and convenience, and the probability of getting approval for a retail card is quite high. For a traditional card, there is a process to go through to get the credit card. Such as the specific financial institution has to look at the credit history and have a credit run with the help of Chexsystems. However, for a retailer card, the process is simple. Customers are encouraged by the salesmen of the store to have a store credit card for obvious reasons like promotion on some kind of purchase.

The application process for the retail card follows these easy steps. Firstly, provide the salesman with customer identification along with entering the Social Security number on the electronic device on which the application is being filled out in order to have an identity of the individual who is applying for the card. Many retail stores have a Tablet that they use to enter the details of a customer. However, some stores stick to on paper application. Some stores ask the customers to go to their website and fill out all the information asked.

 In the second step of the application process, the decision is made to grant the store card to the customer. Almost all consumers qualify for the card. This is because there are no traditional credit checks. The store does not ask the customers to have a very high credit score relative to applying for a credit card at a bank that asks for a decent credit score. The process is carried out in a prompt manner, and the store card gets delivered to the customers at their place of residence that was entered either at the online portal of the store, on an application form, or through other means that the store sees fit.

What steps should be considered to prevent retailer credit cards from inflicting bad credit?

Customers are encouraged to do their homework before applying for a store card. This acts as a safety measure that is suggested by several financial analysts to help prevent customers from becoming in debt for a long period of time. This mechanism is in place to not let ambition and passion like shopping frenzy negatively affect the credit score of the customers. As a result, the following steps should be considered before choosing a retail card.

Choose a credit card carefully

More than once, people get attracted to having a store card from not just one but several stores that include both branded and non-branded ones. If a customer were to apply to just one store credit, then this would not be an issue. However, customers might get greedy towards getting rewards and discounts. In that specific scenario, it should be noted that applying for many cards all at once would cause a significant decrease in the credit score of a given customer. So it is advised to limit oneself to specific customers from where they will make the purchase using credit store card.

Keep a close eye on the credit usage of credit card

Although retail stores have a lower credit limit for the credit card they have offer relative to Visa or Master card, it is vital to watch one’s credit usage. Although having a lower limit is advantageous for the customers since it will prevent the customer from getting into too much debt, it can also work against them. For instance, if a customer has a high balance in their co-branded store credit card, they may be tempted to make large purchases that can cause them to have bad credit.

Have a clear understanding of promotions and offers of credit card

Most store cards have the feature of deferred-interest financing. This feature is widely available on large purchases that the customers indulge themselves in, such as buying furniture. The time period for most purchases under this feature is somewhere between 6 months up to 1 year. People do not have a basic understanding of this concept, and as a result, they consider deferred interest financing to be the same as 0% APR.

In the case of APR, customers do not accrue any kind of interest during the period of promotion and sales. Interest becomes part of the balance of customers only after the promotional period has come to an end.

 Under deferred interest financing, the interest starts to accrue as soon as the purchase has been made. So it is imperative that the entire amount has been paid before the promotional period reaches its conclusion. If a customer is unable to pay the due amount, then they would have to pay a very heavy penalty in which all the deferred interest that was accrued on their balance would be added, and it would have to be paid as well.

Be vigilant to pay the bill on time for credit card to prevent bad credit credit

Customers have faced a situation where they have misplaced a bill that needed to be paid. It usually happens when a customer rarely shops at a retail store. As a result, due to human error, they forget to pay it. It is quite understandable that this type of bill is not the same as paying for car insurance every month, for example, so it more important to keep the bills one has to pay in a place from where it is hard to misplace. On the downside, paying bills past their due date would incur a late fee, or in some cases, they would have to pay a deferred interest amount. Hence, it is always advised to pay the bills before their due time.

Control the craving to make more purchases from a retailer credit card

It is significant to have control over one’s impulses and desires to shop often, particularly if a person is a shopaholic or they follow the trend and fashion religiously. Resisting these impulses would prevent the individual from being enticed to use the retail card.

The business of retailers is by far one of the largest businesses in the world. So they are aware of how to attract people and their customers. They continuously spam their email and fill their inbox with messages containing compelling offers, promotions, sales, and a lot more. A person can do as much as a human, so it is important that they try to have a firm control in their desires.

10 Best Retailer Cards you can get easily

There are several retail credit cards available in the market.  These below-mentioned cards come with credit card offers that attract individuals. These individuals do not need the help of a calculator to understand how these cards will aid them in their credit repair. Since these cards are widely used by customers from all over the world, so it limits risks like theft and fraud. Some of the best credit credit cards are described below.

Premiere Bankcard Credit Card

Premiere Bankcard credit card can be acquired even if you do not have a good credit score. Once you are able to finish the application, you will know if you got approved or rejected in just 1 minute. In terms of building your credit, you have to make sure to pay your bills on time monthly and keep your balances low. Therefore, this is a type of cards credit cards that can help an individual to avoid bad credit and in fact, would help increase their credit score.

Kohl’s Charge Card

Kohl credit card gives its cardholders discounts and special offers monthly and applicable if you go to their store or online. However, they do not give purchase rewards. During their anniversary, cardholders receive a special gift as a way to celebrate their membership. Being a cardholder of Kohl’s credit card, you will enjoy not having to pay for annual fees, receive special anniversary gifts, and you will receive exclusive offers from this card annually that you can use in-store and online. Moreover, if a cardholder spends at least $600 in a year, he/she will be upgraded to Most Valued Customer Status thus will be qualified to receive a bonus birthday gift and free shipping offers every month.

Walmart Credit Card

Cardholders of Walmart Credit Card can earn up to 3% on every purchase they make in the store. They can also earn 1% cashback on other purchases made at this retailer and 2% if they purchase fuel at Murphy USA. Cardholders can also enjoy zero annual fees. Individuals with bad credit can also be approved, and in order to avoid paying for interest, you must settle all your balances.

Amazon.com Credit Card

This card is quite famous in the field of store credit cards. They offer the Amazon Prime member and provide competitive packages and rewards. The membership for this card costs $89, so if you are the person who does not want to pay for a membership, then this card might not be for you. Cardholders earn 5% cashback on every purchase made. If your order is more than $149, you will receive special financing, and there is no annual fee payment. 

JCPenney Credit

Cardholders can earn points and rewards with every purchase made using this card. If you have collected 100 points, you will receive JCPenney rewards certificate worth $10. If you first purchase this card, you will receive $15 off. There is no annual fee for this card as well, which attracts most consumers, and its APR is 27.99%.

Overstock Retail Credit

Overstock retail credit card has no annual fee, and the APR is 26.99%. Cardholders can also enjoy special offers and incentives for every purchase made. If you have purchased more than $249, you can get 0% APR for up to 25 months. However, you have to consider paying the deferred interest if you have an unpaid balance.

Victoria’s Secret Credit

This retailer credit card is issued by Comenity Bank, and for every purchase you make, you can earn 1 point in their physical and online stores. If you earn 250 points from the purchases you make, you will earn $10. Cardholders enjoy no annual fee and an interest rate of 26.74%, and they get notified of exclusive offers and sales.

Dillard’s Credit

If you are a cardholder of a Dillard retailer credit card, you will receive two reward points for every dollar you spend in making purchases. If you have earned 1500 points, you can get a $10 gift check that you can use to purchase their products, and you can also receive 10% shopping pass. There is no annual fee, and the APR ranges from 22% to 24%.

TJX Rewards Credit.

TJX credit card allows you to earn 5 points for every dollar you spend in purchasing their products. You will also receive a reward of $10 if you have reached 1000 points. There is also no annual fee, and the APR rate is 27.24%. If there are new arrival of products, cardholders are notified to join special retail events.

Target Red Credit

Upon signing up for this credit card, you will receive a 5% discount on their products in-store and online. One advantage of being a cardholder of Target Red credit card is the free shipping on your purchases. You will also be given extra 30 days in case you want to return the product. There is also no annual fee for this card, and the APR is 22.90%.

How Do Retailer Cards Affect Credit?

We have heard of some of the best store credit cards in the market that consumers can apply to. It is essential to know the advantages and disadvantages of store credit cards in order to make the consumer more informed when acquiring these.

Advantages for a credit card offered by Retailer stores

Many people are acquiring store credit cards because these offer a lot of incentives to cardholders. Some people are choosing to have store credit cards, especially to those stores that they are visiting regularly or making purchases there. Here are some of the advantages of using store credit cards:

Easy Application and Approval

If you have a bad credit and you are planning to apply for a store credit card, there is a high probability that you will be approved since store credit cards have easy application procedures and high approval rates.

Improve Credit using cards by Retailer stores

If you are a responsible payer, a store credit card may help improve your credit if you use it carefully. Paying your balance on time is essential so that you will have a good credit history.

Reward System by using store credit cards

The majority of store credit cards offer rewards and incentives to their loyal members. Aside from the incentives they offer when you sign up for their credit card, you may also receive ongoing incentives when you purchase.

Disadvantages for using cards offered by Retailer stores

We may observe the advantages of using store credit cards, but we also have to take into consideration the disadvantages these cards possess. We have to know these things in order to make our power of purchase worthwhile. Here are some of the disadvantages of using store credit cards:

High-Interest Rates due to the usage of cards

It is typical and normal for store credit cards to have high interests. You may observe that if you did not pay on time and in full, you might pay charges that are high in interest rates. The discount for every store is good, but if you are not a responsible payer, then you will be in debt because of high-interest rates.  Bloomingdale’s credit card has been recorded as one of the store credit cards that have a high-interest rate, so you may want to take a look at that. Hence, such type of cards are considered cards for bad credit.

Limitations of Use

As compared with a regular credit card, a store credit card has limited usage since most of the time; you can only purchase in the issuing stores. So if you are thinking of using your card to other merchants, you may fail to do so. However, some store credit cards offer Visa or MasterCard options so that you can use them everywhere and make your purchases. One example of this card is the Amazon Prime Rewards Visa Signature Card which is a visa type of store credit card, and you can use it anywhere. You can also earn cash backs by using this card.

Low Credit Limit

This factor is quite important since having poor credit will not help boost your credit score. Instead having poor credit only brings negative ramifications on an individual. The sole purpose of a store credit card is to purchase that is also accompanied by rewards, but it does not help your credit score.

Alternatives for Store or Retail Credit Cards

For people who do not want to be limited in purchasing in issuing stores of credit cards, they have other options of what credit card to avail. Since store credit cards can only be limited to some stores, here are the alternatives for store credit cards which will mostly consist of credit cards that are secured, such as:

Total Visa Card

Total Visa card is a type of unsecured credit card, and the initial credit limit is only $300. Since it is a type of unsecured credit card, there is no need for a security deposit. The good thing about this credit card is that it reports to three major credit bureaus. Upon signing up, you need to pay $89 and an annual fee amounting to $75 for the first year and $48 for the following years to come.

You do not need to pay a maintenance fee during the first year, but after that, you need to pay a maintenance fee of $75. The interest rate of this card is $34.99%.

Surge Mastercard

Surge Mastercard  is also a type of unsecured credit card wherein a security deposit is not required. This card can also help improve credit score, just that it is quite expensive since it has a lot of fees. For the first year, you need to pay an annual fee of $125 and $96 for the following years to come.

Owning this card, you also have to pay a monthly fee of $120. You have to pay $30 if you wish to add an authorized user. If you are late in paying your balance, you will be fined $40.

Capital One Secured Mastercard

Capital one card is a type of secured credit card which means that a security deposit is required in acquiring this. The security deposit can be given back to you once you decide to terminate your account or transfer to an unsecured credit card. This card has no annual fee and has an interest rate of 26.99%.

 The initial credit limit for this card is $200, which is relatively low but will increase after the 5th period of paying on time. This card also reports to three major credit bureaus and can help improve your credit score.

Milestone Mastercard

This card allows people with bad credit to apply and is also known as Milestone Gold Mastercard. The good thing about this credit card is it also reports to three major credit bureaus.

Cardholders do not need to pay a monthly maintenance fee but have an annual fee of $75and $99 for the following years. The APR is 24.90%, and you will also pay more once you have a penalty and late payments.

Indigo Platinum Mastercard

This card is very versatile since it is acceptable in the majority of retail stores. This is similar to other types of secured credit cards available in the market wherein a security deposit is required.

 The annual fee for this credit card can range from $75 to $99, and the APR is 24.90%. The Indigo Platinum Mastercard reports to three major credit bureaus; thus, it can help improve your credit score.

Conclusion

Store credit cards are acquired by people who are fond of buying certain products from their favorite stores. Once you are a regular customer of a retail store, you may want to earn incentives coming from your purchases. That is why people apply for a store credit card. Another reason is that they have a low credit score, and they cannot be eligible to apply for a regular credit card. In today’s time, shopping and retails have become so diverse; consumers can buy products through physical stores and online. The essence of marketing has also evolved; that is why many people are encouraged by salesmen to acquire store credit cards to make the most of their shopping spree to earn rewards. Little do they know that those rewards have some interest rates as a counterpart.

A store credit card is issued by retail stores for the sole purpose of attracting people to become their long-term customers. Some of these cards are versatile, but the majority only allow people to purchase products and goods from the issuing store. There are also differences between store credit cards and regular credit cards. One of these is the limitation of use; just like what was mentioned, store credit cards are more limited to use. There are names best store credit cards such as Premiere Bankcard Credit Card, Kohl’s Charge Card, Walmart Credit Card, Amazon.com Credit Card, JCPenney Credit Card, Overstock Store Credit Card, Victoria’s Secret Credit Card, Dillard’s Card, TJX Rewards Credit Card, and Target RedCard.

We have heard the good things about having a store credit cards for bad credit, but cardholders do not know that it can affect their credit score negatively. Since issuing companies will encourage cardholders to consume more and buy their products through their advertisements, cardholders who are encouraged will swipe more, and there may come the point that they may have late payments and charges that can affect their credit score. Once you have a negative record, it will be in your credit history. There are alternatives that people can acquire instead of having store credit cards such as Total Visa Card, Surge Mastercard, Capital One Secured Mastercard, Milestone Mastercard, and Indigo Platinum Mastercard.

Article written by Robert Ferry

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