You might think you know all about credit cards – but do you know the differences between store credit cards and general-purpose credit cards?  If you’ve never considered the two, know that there are important differences between them that you’ll want to know before you make the decision to open a new account.

Unlike the cards issued by a financial institution, which can be used just about anywhere, store credit cards can often only be used at that particular issuing store. However, they do have some advantages, such as better rewards for purchases made at that store, and may also unlock exclusive sales and periodic exclusive discounts for the card holder.

Let’s take a deeper look.

What is a store credit card? 

Store credit cards, also known as retail credit cards, can generally be used only at the store that issued that credit card. For example, the Jones Department Store card may be used for in-store purchases at that specific store or for its corporate brand with online purchases.

These retail cards are also known as closed-loop cards because they can typically be used only within a specific company. It’s usually easy to spot these types of cards because they will be branded with the company logo and won’t bear the logo of the international card networks (such as Visa or MasterCard).

These retail cards are considered “real” credit cards. Store card activity gets reported to credit bureaus just like purchases with general credit cards. This means that store credit card activity winds up on your credit reports and is considered as part of your credit score and credit history.

How do store credit cards differ from other cards? 

Unlike closed-loop cards, a general-purpose credit card is a form of “open-loop” card issued by a bank or other credit-card issuer like Visa or American Express. Unlike a store credit card, these may be used for transactions anywhere the card brand is accepted because they have a large card network.

What is a co-branded credit card?

Some cards are a combination of store cards and traditional cards. These retail store cards may be used anywhere and are called co-branded cards. They will typically bear the logo of a card issuer, such as Visa, and the logo of a store.  Amazon and Costco are two examples.

These are not as common as other types of credit cards and may be available only to customers with good or excellent credit. These cards reward brand loyalty by offering users special cardholder benefits for every dollar spent with their retailers.

Co-branded store credit cards may offer the best of both worlds to those who qualify. Users may earn rewards and savings quickly at their favorite store while still earning rewards for purchases outside of the brand.

Pros and cons of cards 

Is it a good idea to get a credit card from a store or is a general credit card better? The answer depends on how you spend your money and how you like to earn rewards. Let’s look at the pros and cons of each type of card.

Pros of store credit cards

  • Reinforce loyalty with generous rewards for eligible purchases
  • May be available to those with lower credit scores
  • Usually offer a perk upon account opening, such as a steep discount on your first purchase with the card or during a promotional period
  • Frequently offer card-holder discounts and sales

Cons of store credit cards

  • Typically have low credit limits, which restrict spending
  • Usually restrict use to a specific corporate brand
  • Normally have higher interest rates than traditional credit cards
  • Have lower credit limits

Pros of traditional credit cards

  • More flexibility to use almost anywhere
  • Lower interest rates
  • A greater variety of rewards cards are available so you can choose what works for you (such as a statement credit or cash back) instead of being tied to what a specific store offers
  • Interest and annual fees may be lower
  • Credit limits are usually higher
  • May offer a wide range of options, including balance transfers, no foreign transaction fees, promotional financing, and deferred interest

Cons of traditional credit cards

  • May be difficult to get for those with poor credit or limited credit history
  • Do not offer enhanced rewards and benefits for band loyalty like department store credit cards and other store credit cards
  • Higher credit limits and ease of use may lead to overspending

Do store credit cards impact my credit score? 

Store credit cards could impact your credit score in the same way traditional credit cards do. If you pay your bills on time every month and don’t max out your credit cards, this could be a good thing. Your credit score may take a hit, though, if you struggle to control spending and miss payments.

It’s very important to spend responsibly and pay attention to your credit utilization. This means that no matter what type of credit card you have, using all of your available credit or maxing out your credit cards may hurt your credit score. On the other hand, opening too many credit cards and having a lot of available credit you are not using might hurt your credit score too.

If you spend wisely, pay all bills on time, and avoid other money traps, having a store credit card could help you build a strong credit history and wind up with a good credit score. That applies to store credit cards in the same way it applies to any other debt.

Why pick a store card? 

When deciding which type of credit card is right for you, it’s important to think about where you usually spend your hard-earned money. If you buy most of your clothing at a certain department store, getting that department store card might makes sense.

Many consumers find that getting a store credit card before they make a big purchase, such as new furniture or appliances, is a good decision. Since many store cards offer deep discounts for your first purchases, this could save you a bundle.

How to choose a credit card

There is no one-size-fits-all approach to choosing a credit card of any kind.

Everyone needs to decide what is important to them. While store cards may offer big rewards for loyalty, they do have some limitations, such as not offering balance transfers. It’s also important to compare interest rates and annual fees before deciding.


It’s nice to have options! But it’s wise to know how to use them. The best store credit card is one that will save you the most at places you already shop.  Many retailers — including department stores, grocery stores, coffee shops, airlines, and online retailers — offer their own store credit card, so it’s worth taking a look at how you can save at stores you love.

Do your research, strengthen your money mindset, and choose well!