Department Store Credit Cards Pros and Cons

department store credit cards pros and cons

Pros and Cons of Department Store Credit Cards

J.C. Penney started the store credit card craze in the 1950s. Other department store credit cards were quick to follow their lead. Since that time, nearly all consumers have been approached by a cashier at the department store who wants him/her to open department store credit cards.

Stores offer cards in hopes that allowing the customer to buy whatever he or she wants instantly will entice the customer to spend more money. An enticement of a large discount on your first purchase usually seals the deal. The 20% one- time discount and the 10 % off future purchases can be a good deal if you plan to come to return frequently, but if you rarely ever shop at the store, it is not a good idea to sign up for the card. Signing up will put your credit information out there for anyone with access to the store records (including the cashier with whom you are signing up) to see and have access to.

Where Can You Use a Department Store Credit Card?

You can only use the store card at that one place. Store credit cards can be branded for use in several different stores. There are Store cards that are affiliated and are in association with the Visa or MasterCard brand. Usually, interest rates for carrying a balance on a department store account are high (your credit rating rarely changes this). Applying for a department store card will lower your credit score until you have built up a favorable credit history.
Store cards mean individual sales for cardholders only. They also usually involve higher discounts for card holders. Good credit history with a department store card can eventually help your credit score. A store card that is branded as visa or master card is usable in any store and can have more benefits. These cards allow the consumer to build up extra points to use to purchase rewards.

It is easier to apply for store credit cards, and this makes the possibility of identity theft easier. Having a lot of store credit cards allows people who have a “shopping” problem to continue to purchase items. Additionally, the items they don’t need (and sometimes don’t want) to buy.

Department Store Credit Cards Deal or No Deal?

Many stores have “cash back” programs that guarantee a % back on your card each month or store “dollars” to be sent to you. The disadvantage with the store “dollars” is that they can only be used at that one store and they usually have a time limit to do so.

Be careful not to be tricked into getting a “debit” card for a department store card. This type of card draws from your bank account and can result in overdraft fees.

Department store credit cards often offer credit card fraud protection programs (but you usually are billed for this service) and insurance to cover your payments in case of illness or death.

There is not an annual fee for department store credit cards. You can pay your credit card when you go shopping at the department store as well as online or through the mail. Most department store credit cards offer low payments. Credit bureaus see having too many department store credit cards as a red flag. Also, they see this as a risk that you will overspend in the future. Once you are overspending your income, it will cause you to have a lower credit rating.

Monica Kowollik

Director at
Monica has covered credit card and personal finance news for over 15 years. From an early age, she developed an interest in financial literacy and saving money. Monica hopes to help others to improve their personal finances one article at a time.