Are Department Store Credit Cards Worthwhile?

Written by: Valencia Higuera

If you shop at department stores, then you’ve probably been offered department store credit cards upon checkout. Submitting your application and receiving an instant approval is one way to save 10% on your purchase, and this single feature convinces many to apply for an account. However, department store credit cards are limited and you can only use these cards in a particular store. But despite their limited reach, department store credit cards can be worthwhile and a good deal.

Build Credit History

Department store credit cards are know for their leniency. You can apply for an account in-store and receive an approval or a rejection within a matter of minutes. The criteria for obtaining a department store credit card isn’t as high as obtaining a major credit card from a bank, which makes these credit cards an ideal choice if you need to establish your credit history. Apply for a Visa or MasterCard without a credit history or with a low credit score and you might receive a rejection letter in the mail. Quite the opposite with department store credit cards. These creditors may approve your application as long as you have a clean slate, indicated by no existing balances or negative credit report remarks.

A credit card in your name opens the door to mortgages and other loans. Department store creditors report to the bureaus just like banks that issue credit cards. Keep your balances low and pay your bills on time, and you can establish an excellent credit score with department store accounts alone.

But while department store credit cards are helpful when you need to build a credit history, there is a price to leniency. The interest rate on department store credit cards are often higher than bank credit cards.

Credit Card Promotions

Department store credit cards are also extremely worthwhile if you obtain an account with a favorite retailer. Being a cardmember opens the door to various promotions and discounts. Department stores periodically send emails or postcards to cardholders that include discount codes for major savings and invitations to exclusive sales. What’s more, opening a credit card with your favorite department store gives you the opportunity to earn points on every dollar spent in the store. You can redeem these points for cash or merchandise. Other perks might include free shipping on online orders, free gift wrapping and other deals.

Inquiries and Department Store Credit Cards

Each application that you submit for credit results in a credit report inquiry. An occasional inquiry won’t ruin your credit score. Still, each inquiry deducts a few points off your credit score. If you submit too many applications for department store credit cards in a short span of time, you can cause significant damage to your score. Don’t accept every credit card offered by department stores. Pick one or two stores that you frequent and complete an application with these retailers. It’s best to spread your applications for department store credit cards over several months. This allows time to recoup any points lost, and by spreading your applications, you don’t appear desperate from a creditor’s standpoint.


Are Department Store Credit Cards Worthwhile?

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