Store Credit Cards: Are They Worth Getting for the Holidays? (Part 1)

The holidays are here, friends.

You want to buy, buy, buy and retail stores want you to spend, spend, spend. And, all the while, Bing Crosby is encouraging the heavens to open up and “let it snow, let it snow, let it snow.”

But don’t let all the holiday cheer – the sales, the discounts and the offers – deceive you. Retailers have one goal in mind this year: to get you to spend the most amount of money possible.

To do that, they push their store credit cards. This holiday gamesmanship takes the form of email blasts, junk mail assaults, and polite-yet-pushy cash-register pitches.

Each of these methods is designed to get you to sign up for their in-house credit cards. They’re thinking you’re going to overspend, and they’d prefer if you went into debt with them instead of their competitors.

With that in mind, we’ve generated a list of 10 store credit cards offers available this holiday season. Five are included in this article and five in the second part of this series.

For each store credit card we cover, we’ll give you the card’s perks, APR, fees, and penalties. At the end of this article, we’ll give you our thoughts on the pros and cons of opening up store credit cards with the retail brands we’ve covered.

Be sure to check out our second article to get our final conclusions on whether or not store credit cards are worth signing up for.

1. Target Credit Card

Known as the REDcard, Target’s credit card is a popular choice for customers of the 11th largest retailer in the United States. The card can be used on the Target website or in any brick-and-mortar store.

Perks of the Target Credit Card

The card has three main perks: 

  • Free shipping on most orders from Target.com
  • An extra 30 days for returns 
  • 5% discount on most Target purchases

There are some exceptions to each of these perks. For instance, you won’t get a 5% discount on prescriptions or over-the-counter medications behind the pharmacy desk, eye exams at Target, some restaurants in Target stores and a few other types of purchases.

The longer return period does not count for purchases made through Target Mobile or items with a fixed return date or no return eligibility.

APR, Fees & Penalties for the Target Credit Card

The APR on the Target credit card is a straight 23.15% which, based on our research of more than 30 credit cards, is very high and usually reserved for people with bad credit. Many of the cards we review have a range of APR’s that start in the low- to mid-teens and stop between 19% and 24%.

We want to give you an idea of how much a store credit card’s 23.15% APR will cost you compared to a regular credit card with a 15.24% APR if you spend $1,000 on gifts and such at Target. 

First, you have to remember that Target cardmembers get a 5% discount on that $1,000 purchase, so their store card balance will be $950, which is a $50 savings right off the bat. 

Now, let’s get to the interest payments you’d pay if you carried the $950 balance for 11 months:

  • $1,000 with the Target card’s 23.15% APR equals about $119 in interest payments over 11 months.
  • $1,000 with a regular credit card’s 15.24% APR equals about $78 in interest payments over 11 months.

The difference between the two APRs over 12 months is $41, which isn’t too much if you’re only spending $1,000. But when you add in the $50 discount you earned on the original purchase, the Target store card is actually a smart choice even though it’s got a high APR.

Two other cards we researched have 5% discounts, too:

  • Best Buy customers can get 5% cash back in the form of a gift card balance
  • Those with a Lowe’s store card can get 5% off all purchases (we cover this card in the next article)

In our opinion, these store cards are worth using because the 5% discount counteracts the high APR. Our best advice, though, is to pay your balance off in full every month so you don’t pay any interest.

As for the Target credit card’s penalties and fees, you can expect to pay up to $38 for a late payment and up to $27 for a returned payment.

2. Walmart Credit Card

The Walmart credit card is a Mastercard that provides a considerable amount of perks when compared to the Target credit card. However, just like the Target card, Walmart makes it pretty hard to find the APR and fees you can expect with this card.

Perks of the Walmart Credit Card

At the time of our research, new cardmembers received the following perks:

  • 15% cash-back reward on your first purchase ($50 limit on cash back reward).
  • A $75 gift card when you open a credit account online and use your card to make an electronics purchase of at least $149.

The catch to both of these offers is that you have to use your card the same day you’re approved. Also, the cash back you receive goes back to you in the form of a credit in your account; it’s not pure cash back you can use wherever you want.

Cardmembers also get 3% cash back on Walmart.com purchases, 2% cash back on Walmart and Murphy USA gas, as well as 1% on purchases at Walmart and anywhere else.

APR, Fees & Penalties for the Walmart Credit Card 

The Walmart credit card comes with three different APRs based on your “account” level, which is their way of saying your APR depends on your creditworthiness. At the time of our research, those three APRs were 17.15% (Account 1), 20.15% (Account 2) and 23.15% (Account 3).

The low-end APR seems pretty attractive compared to Target’s rate, but Walmart’s terms and conditions make it clear that your chances of getting the lower APRs are slim.

Here’s what their fine print says: “Rates will be determined after application review and disclosed to you before purchases or charges on the account are permitted. A limited number of applicants are expected to receive Account Type 1 and 2.”

Late fees on the Walmart credit card are up to $38 if you miss a payment.

3. Best Buy Credit Card

Best Buy is arguably the premier brick-and-mortar retail electronics store in the country. As such, they’ve got a thriving credit-card program that includes multiple cards. You won’t know which card you get until you apply. Your choices are:

  • My Best Buy Credit Card Preferred 
  • My Best Buy Credit Card
  • My Best Buy Visa Platinum
  • My Best Buy Visa Gold

The card you get depends on your creditworthiness, so don’t automatically assume you’ll get a the card you want.

Perks of Best Buy Credit Cards

At the time of publishing, Best Buy credit card members had a choice between getting 5% cash-back rewards on purchases for the life of your card or varying time frames of no-interest APR on the following purchases:

  • 6-month financing on a purchase of $199 and above
  • 18-month financing on a purchase of $479 and above
  • 18-month financing on an appliance purchase of $479 and above
  • 24-month financing on a home theater purchase of $799 and above

However, you can only choose one of these financing options or the 5% rewards option, and you have to make the decision before you make your qualifying purchase. You can’t take one of the financing options and the 5% rewards; it’s one or the other.

Also, if you’re accepted for the Best Buy Visa, you have an added perk of getting the following cash-back rewards through Dec. 31:

  • 2% back on retail/dining/grocery purchases
  • 1% on everything else

You don’t get any rewards points for purchases made at Walmart, Target, Costco, Sam’s Club and Amazon.com.

Pro tip: The 5% cash back awards are given via a rewards certificate you can use on future purchases.

APR, Fees & Penalties for Best Buy Credit Cards

No matter which card you choose, you’ll pay an APR of 25.49%. The cards do differ in annual fees, though:

  • My Best Buy Credit Card (Preferred and normal): None
  • My Best Buy Visa Gold: $59
  • My Best Buy Visa Platinum: None

All cards have a late payment and a returned payment fees of up to $37.

4. Bed Bath & Beyond Mastercard

Unlike Best Buy’s confusing collection of credit cards, the Bed Bath & Beyond credit card is just one card with one set of perks and fees. It did take us some time to track down certain fees, though, because they weren’t listed on the Bed Bath & Beyond website.

Perks of the Bed Bath & Beyond Mastercard

When you sign up for the Bed Bath & Beyond credit card, you get three main benefits: rewards points, 0% APR for 6 or 12 months and a coupon for $25 off a $100 purchase.

The rewards points bonuses have three tiers: 

  • 5 points per dollar for purchases at Bed Bath & Beyond stores
  • 2 points per dollar for gas and groceries
  • 1 point per dollar for everything else

According to the company’s rewards fine print, 1000 points is good for a $10 gift card.

The promotional period you get depends on how much you spend. Purchases of $250–$499.99 get 6 months of 0% APR and purchases of $500 and above get 12 months of no interest.

Pro tip: The Bed Bath & Beyond brand includes buybuy BABY, Cost Plus World Market, Harmon Face Values and Christmas Tree Shops. Any purchases made at those stores will get you 5 points for every dollar you spend.

APR, Fees & Penalties for the Bed Bath & Beyond Mastercard

APRs for the Bed Bath & Beyond credit card are pretty reasonable compared to Target, Walmart, and Best Buy. If you’re accepted for the card, you’ll be given an APR of either 14.24%, 18.24% or 24.24% depending on your credit scores and history.

Bed Bath & Beyond’s website doesn’t list the fees you pay if you make a late payment. We had to call the company’s credit card line to get this information. They told us that late fees are $27 for the first late payment, and then jump to $37 for subsequent late payments.

Also, remember that the moment you make a late payment, you lose your 0% APR on purchases and you’ll pay your quoted APR (14.24%–24.24%) for the entire original balance.

5. Gap Credit Card

Like the previous retailers we’ve listed, Gap offers customers two credit cards: GapCard and Gap Visa. Shoppers can upgrade to Silver status on either card, but more on that in a second.

Perks of the GapCard & Gap Visa Card 

When you’re accepted for the GapCard or Gap Visa, you get a 15% off coupon you can use in a Gap store or online within 90 days of getting it. You’ll also receive 10% off purchases made on Tuesdays, a birthday gift, occasional cardmember savings and the luxury of not needing a receipt to make returns.

You’ll also get 5 rewards points for every $1 you spend at Gap stores and online. Gap Visa customers also get 1 point for every $1 they spend everywhere else.

Pro tip: You’ll score a $5 coupon every time you rack up 500 points.

Perks of the GapCard & Gap Visa Card Silver

The Silver version of the GapCard and Gap Visa isn’t based on your creditworthiness. To get upgraded to Silver status, you have to earn at least 5,000 points in a year, make on-time minimum payments once you hit 5,000 points and have an account in good standing.

Once you get Silver status, you’re entitled to the perks listed above, as well as:

  • A 20% bonus on your reward points every quarter.
  • Free shipping for online orders.
  • Free basic alterations on Banana Republic purchases made with your Silver card.
  • The ability to choose your own 10% sale day; you aren’t limited to Tuesday.

Pro tip: The Gap brand includes Old Navy, Banana Republic, and Athleta.

APR, Penalties & Fees for the GapCard and GapCard Visa

No matter which card you are approved for, you won’t pay an annual fee and you’ll have an APR of 25.24%.

Just like Bed Bath & Beyond, Gap doesn’t list their late fees on their website. So, we had to call Gap to get information on late fees. The customer service rep we talked with told us you’ll pay $27 for the first late fee and $37 for every late fee after that.

Our Conclusions About Target, Walmart, Best Buy, Bed Bath & Beyond and Gap’s Credit Cards

The five cards we’ve reviewed here all express some very odd quirks that don’t work to the benefit of the consumer. For example, many of the stores offer multiple cards and you won’t know which card you’ll get until you submit your application.

So, if the store’s best credit card has a lower APR or no annual fee, there’s no way to know if you’ll get that card until you’ve applied. You might find out that you’ve been approved for the worst card in their lineup.

We also find it very interesting that Bed Bath & Beyond and Gap don’t include their cards’ late fees on their credit card pages.

In our opinion, these practices are a bit deceptive and our hunch is that these stores do this because they know you like shopping with them or you wouldn’t be checking out their credit card offers either in the store or online.

They also know you’re ready to buy, and because they know that, their goal is to dazzle you with some up front offers so you don’t take the time to think through the decision and understand exactly what you’re getting yourself into.

We talk more about this in the second part of our store credit-card series, so stop by the final installment and read a more in-depth explanation.

In the meantime, we hesitate to pick a “best” card from our list because all of these cards have high APR’s, with the exception of Walmart and Bed Bath & Beyond’s sub-15% APRs for select consumers.

Gap’s Silver card offer some really awesome perks – free shipping and free alterations on Banana Republic clothes bought with your Silver card – but your spend will have to be $5,000 on all purchases or $1,000 of purchases on Gap items.

Now, our previous research on income and credit cards reveals that it’s pretty easy to hit that $5,000 spending mark for everyday expenses. You can probably get there in three or four months.

See Also: The Best Cash Back Rewards Card of 2016

But is it worth it to make the Gap card your exclusive credit card just so you can Silver-level perks? That’s up for you to decide – die-hard Gap fans may say yes, but we’re willing to bet most people would say no. 

Gap’s Silver cards aside, Best Buy’s credit cards have a lucrative 24-month, no-interest deal if you make an electronics purchase of $799 or more. But here’s the catch with that card, as well as any card with a 0% offer – the moment you make a late payment, you lose the 0% APR and you pay your normal APR on the entire original amount. Keep that in mind next time you’re tempted to sign for a store card.

We’d say that the Best Buy and Target store cards are the best options for consumers because the 5% discounts and the cash-back you get counteract the cards’ high APR. 

Related: Americans Are Bad at Budgeting and Great at Making Excuses

Looking Ahead to Part Two: Macy’s, Home Depot and More

The second part of this series covers store credit cards from Macy’s, Home Depot, Lowe’s, Sears and Kohl’s. We follow the same format we did here, but with one exception: We wrap up with a pretty hefty explanation of why you should or shouldn’t get a store credit card.


J.R. Duren

J.R. Duren is a personal finance reporter who examines credit cards, credit scores and bank products. J.R. is a three-time winner at the Florida Press Club’s Excellence in Journalism contest and his advice has been featured in MSN and Fox’s money sections.


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