Store Cards with the Best Rewards


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Pitches to save an additional 10% to 15% on a day's purchases by opening a store credit card account can sound pretty appealing. You might also be attracted by the cards' additional benefits, such as access to special sales or discount coupons.

But store credit cards have some significant drawbacks. And opening up too many accounts can lower your credit score.

To help you decide when to say yes to a store card and when to decline, we've outlined how the programs generally work and their pros and cons. We also looked at programs offered by some of the largest retailers to find the most generous ones. You can find the details in Best store rewards cards.

Know the different types

Retailers usually offer one of three types of cards. Many stores offer a co-branded credit card, which is imprinted with an American Express, Discover, MasterCard, or Visa logo. Such cards typically allow you to earn reward points when you shop with that particular retailer and when you use it at other stores that accept the card's logo.

Other retailers issue store cards that don't carry a credit-card logo and can only be used in their stores. Some large chains, including Bloomingdale's, Gap/Banana Republic, and Macy's, offer both their own store cards and co-branded ones.

The points you earn on co-branded or store cards are based on how much you spend, just like other reward programs. Points can be redeemed for gift cards, store coupons, or discounts on travel or restaurant meals. A few card programs, like the ones run by Amazon, Costco, and Walmart, pay you cash rewards. And as we noted last month, this fall shoppers using a Target REDcard (its store card or co-branded Visa card) will receive 5% off purchases when they check out.

A third kind of store card can be used only to finance a big purchase. These cards are often issued by home-goods or electronics stores, such as Apple, Amazon, Home Depot, and Lowe's. Most of the cards offer six months to a year of zero percent interest. If you don't pay the balance by the end of that period, however, you'll be charged interest retroactively from the date of purchase.

Check the clauses

Read all the card terms before you sign up for one. Check the restrictions on when, where, and how you can earn rewards. For example, with a Costco American Express card you can earn 3% on gas and restaurant meals, but you get only 1% on your Costco purchases.

You'll also want to know if a program gives big spenders a higher level of rewards. If you don't spend much money in a store each year, you might find that you won't earn much in the way of rewards. For example, Macy's has four different card programs. The most basic—for people who spend less than $500 at the store annually—offers no cash back. But if you spend $500 to $999, you'll get 1.5% cash back on Macy's purchases. If you spend $1,000 or more, you'll earn 3% shopping rewards on Macy's purchases and access to a priority customer-service phone line.

Also see if the rewards expire if you don't use them within a certain time period. While Cabela's imposes no expiration date, rewards from JCPenney, BJ's, and L.L.Bean (which come in the form of coupons) expire within about a month (JCPenney), six months (BJ's), or a year (L.L.Bean).

Maximize your rewards

If you choose a co-branded store card, make sure another card you own isn't a better choice at other retail locations. For example, L.L.Bean's Visa card gives you 3% cash back when you purchase its merchandise, plus free shipping, free monogramming, and discounts on its Outdoor Discovery Schools. But you get only 0.5% back on purchases made elsewhere, such as drugstores, grocery stores, and gas stations. If you're filling up your tank and you have a bank-issued card that gives you 2% back on gas purchases, that's the card to grab instead.

Protect your credit

Opening several card accounts at once is a bad idea. In one of his "Ask John" columns, John Ulzheimer, a credit-score and report expert at, described the problems of a woman whose credit score dropped by 10% after she signed up for five store cards on one day. Signing up for several cards also immediately reduces the average age of your credit lines, a factor that accounts for about 15% of your FICO score.

But Ulzheimer advises readers that having a substantial credit line can be good for your credit score as long as you keep your balances low. That's because your debt-to-available-credit ratio stays low, which will help keep your credit score high. Just do it over many years.

A store card is not for you if you'll be tempted to buy more things than you normally would to get more card rewards. Also, because many store cards charge high APRs—about 25% at Bloomingdale's, Macy's, Sears, and Target, nearly double the rate of many bank-issued cards—skip them entirely if you tend to carry balances. Instead pick a bank card with the lowest interest rate you can find.

This article appeared in Consumer Reports Money Adviser.

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