Credit cards from department stores
Many department stores offer credit cards branded with the store’s name. These store credit cards can be a good choice as a first credit card for a person seeking to build a credit score. However, they tend to have quite high interest rates.
Store cards existed before big-name international credit cards, which largely replaced them. They were known as credit accounts and they were offered by shops to trusted customers to retain their custom. Many such accounts offerred a membership card to identify the account holder, enabling credit purchases at all stores in a chain and not only the local shop.
Store cards usually were only accepted within the store, and administration of the card and account were performed in-house.
When credit cards became popular, some banks started to offer their services to shops as white label providers, meaning the bank would perform the administration and credit check in return for a share of the profit or for a fee. The store would perform the card’s marketing. This expanded the store cards’ usage to the VISA and MasterCard networks, which in turn allowed these cards to be used around the world rather than in only one shop.
Store cards can offer some of the best rewards of all credit cards, as the rewards come from the store branding the card. However, the rewards also tend to be less flexible. As is usually the case with credit card rewards programs, there is a trade-off between the value of the rewards and their flexibility.
Store cards can offer a quick response to applications, as they are often issued in the store. Sometimes the signing-on bonus is an instant discount, so a customer who would otherwise pay cash can lower the total sum charged by applying for a credit card at the time of purchase. Credit checks are generally not extensive.
Store credit cards tend to have higher interest rates than standard cards, partly because the credit checks are not as extensive. While store credit cards are very convenient, it is harder to check rival offers.