The Fine PrintDepartment stores, discount stores and home stores nationwide offer their own store credit cards, and if you have one, you may get special membership discounts and rewards that others can’t get. But are they worth it? Here’s a run-down of popular store credit cards out there and a better look at the fine print.
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Macy’sThe Draw: Whether you opt for a Macy’s (Stock Quote: M) Visa card or a Macy’s card exclusively for Macy’s stores, card holders get more discounts than non-card holders. You can get exclusive in-store savings, choose-your-own-sale days and coupons for dollars of your purchases. Additionally, if you have a card, you can make returns without receipts. And depending on how much you spend, you may be able to get free special services including gift wrapping and basic alterations.
The Catch: The APR on the Macy’s credit card is 23.99% according to the Macy’s Web site. That’s more than double the average 11.5% APR for the average consumer credit card, according to Bankrate.com.
Plus, in order to qualify for free gift wrapping and other services, you’ll have to spend at least $1000 per year at the store to qualify. At least late payment fees aren’t the standard $40 across the board. They’re $15 for balances less than $50 and $29 for balances between $50 and $299.99 and $39 for $300 and up. We’ve seen worse.
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SearsThe Draw: “The same way you can keep track of your physical health, cholesterol, blood pressure, you need to look at your credit health,” says Susan Ehrlich, President of Sears Financial Services. Card holders can find out their credit score and use an online tool that estimates what credit behaviors are affecting their score and what impact certain credit behavior changes will have on their score, Ehrlich explains.
Cardholders also have access to exclusive monthly sales, like 5% or 10% off a particular department. Sears offers both a store-specific credit card that can be used at Sears (Stock Quote: SHLD), Kmart and Land’s End, as well as a Platinum MasterCard that’s accepted wherever MasterCard is accepted.
The Catch: There’s a 20.4% variable APR on the card, which is offered through Citibank. The same benefits from Christmas Club Cards, which earn you 3% on what you save for Christmas shopping at the retailer, can’t be earned from shopping with the credit card.
Some of the monthly deals for Sears card holders are for specific shopping categories, so if kid’s clothes are on sale but you don’t have any kids to shop for, you’re out of luck that month.
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JC PenneyThe Draw: You can get 10% off your first purchase with the JC Penney (Stock Quote: JCP) credit card. Plus you won’t have to shell out an annual fee, something we’re increasingly expected to see following stricter credit card legislation, your monthly payments will be low, and you have no fraud liability if an unauthorized user gets a hold of it, the company promises.
The Catch: First of all, the APR on this card is 24%. And while you may be able to take advantage of special savings opportunities for cardholders, like 15% off regular and sale-priced items for example, it’s unclear how often you’ll get them. Plus the 10% off your initial purchase doesn’t include stuff you buy at Sephora inside JCPenney, shipping and handling fees, gift cards items that are out of stock.
ExpressThe Draw: You earn a point for every dollar you spend, and receive a $10 rewards card for every 250 points you earn. You get on the Express A-List if you rack up 500 points, which brings your rewards up to $15 for every $250 you spend.
The Catch: If you’re young and a shopaholic, you might want to steer clear of this. Express goes out of its way to mention a special student program in which people with no credit history can get an Express card.
Also, you have to use your card at least once a year if you want to keep all your membership benefits and rewards points, the credit card issuer says.
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The Draw: With the Victoria’s Secret Angel Credit Card, you get a $10 reward for every 250 points earned, a surprise birthday gift every year, early access to sales, special offers on new items and an exclusive customer service number. If you earn 250 points, you’re upgraded to an Angel VIP, getting you double points on all bra purchases, free beauty product samples and makeovers, access to invitation-only events in stores and surprise birthday gift every year.
The Catch: This card comes with a 22.8% variable APR. But at least you’ll know the worst-case scenario. The issuer promises your APR will not decrease below 22.8% nor increase above 24.99%.
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Home DepotThe Draw: The Home Depot (Stock Quote: HD) credit card offers no payments and no interest for six months if you spend $299 or more in one shot. Plus, the card promises no annual fee, low monthly payments and no liability on unauthorized charges.
The Catch: The best APR available is 17.99% but it could be 26.99%, which isn’t too far off from the 29.99% default rate. It’s almost like being punished, or at least paying a premium, for using a store credit card over a regular Visa, MasterCard or American Express.
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TargetThe Draw: Target has three store card options: a regular Target (Stock Quote: TGT) store card to be used only at the store, a Target Visa Credit Card accepted wherever Visa cards are accepted, and a Target Check Card through Target National Bank that draws money from an existing bank account. With those cards, you may be able to either get 10% off a specific day of the month or earn rewards points.
The Catch:Depending on your credit score, your APR can range from between 13.99% and 22.99% for the Target Visa Card. For the regular Target store credit card, the APR is 22.99% across the board. With the check card, there are returned payment fees of as much as $40.
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Wal-MartThe Draw: Wal-Mart offers its own store credit card and a Wal-Mart Discover Card. With the Discover card, you can earn back 1% of purchases and get up to a $100 cash advance when you make a purchase.
The Catch: With the Wal-Mart (Stock Quote: WMT) Discover Card, if you spend less than $1,500 in a calendar year, you only get 0.25% back. If you spend $1,500 to $3,000, you can get 0.5% back and you have to spend more than $3,000 to finally get 1% back. The APR can range between 13.9% to 22.9% depending on your credit score. The APR on the regular store credit card is 22.9%.
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The Draw: By signing up for a Kohl’s (Stock Quote: KSS) credit card, you can get 10% on your next order get extra discounts 12 times a year and save an extra 15% to 30% on all merchandise, including stuff on sale, the company promises. If you spend at least $600 on your Kohl's Charge every year, you get extra benefits. You can pick a personal sale day six times a year and receive even more savings offers.
The Catch: Aside from numerous recent consumer complaints about the card, in the end, are you really saving money when you’re spending it?
Photo Credit: Kohls.com