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When shopping at virtually any store on earth, you've probably been offered a store-branded credit card at checkout. While you've originally planned to pay for the purchase with your debit or regular credit card, the merchant talks to you about how using their credit card is better. You can earn more rewards than your regular card, get extra perks with that brand, and to top it all off, you'll get 10% off today's purchase when you get approved for and use their card. Many brands, like Kohls and Gap, will sometimes bump that savings upwards of 35% off your first purchase with the card. It sounds like a no brainer, right?
The downsides
Well, almost all of the time the store-branded credit card turns out to be much less advantageous than your regular credit card, for a few key reasons. The first is kind of obvious, that is that a store-branded credit card can only be used at the store it is for. No matter what rewards or benefits the card brings, you are completely limited to enjoying either of those things at one store. If you stop shopping at that store or need something that brand is out of stock on or does not offer, you miss out on using any of the rewards or benefits of that card.
The second is more about practicality, and that has to do with credit card volume. If you want to enjoy the most rewards and benefits at every brand you shop with, you're going to end up with a pile of credit cards. Not only does this make your finances infinitely more complicated, but a potential nightmare to keep organized. Say you end up with 10 store credit cards: that's 10 different sets of rewards, benefits, accounts, monthly payments, and wallet space to keep track of.
The positives of earning a little bit more and enjoying a little bit more benefit can very quickly diminish when you actually have to take care of all of it. Don't waste a hard inquiry on your credit for a low performing and limited card with no signup bonus when there are much better alternatives out there waiting.
A better way
The better option, for most people, is to find one or two general credit cards that are accepted everywhere and the rewards and benefits match up with how you spend your money. Here are a couple of our favorites:
Blue Cash Everyday® Card from American Express
The Blue Cash Everyday® Card from American Express is a fantastic cash back card that focuses on rewarding you the most on your everyday purchases. Earn the most with this card when grocery shopping or when filling up at the pump, but still earn on every purchase you make.
Earn a $150 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months. 3% Cash Back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%), 2% Cash Back at U.S. gas stations and at select U.S. department stores, 1% back on other purchases. Low intro APR: 0% for 15 months on purchases and balance transfers, then a variable rate, currently 15.24% to 26.24%. No annual fee.
Chase Freedom Unlimited®
The Chase Freedom Unlimited® card is a great card for those who want straightforward cash back with no points or bonus categories to keep track of. This one comes with an introductory offer that sets itself apart from the rest too. New cardholders will earn 3% cash back on all purchases in your first year up to $20,000 spent, and afterward, you'll still earn 1.5% cash back on each and every purchase you make, no matter when or where. Another reason to choose this or the next card when compared to store cards is Chase's 5/24 rule which limits new cardholders to opening only five credit cards (from any issuer) in the last twenty-four months, something to consider when comparing Chase's stellar rewards and benefits to more limited store cards.
Earn 3% cash back on all purchases in your first year up to $20,000 spent. After the first year, earn unlimited 1.5% cash back on all purchases. 0% Intro APR for 15 months from account opening on purchases and balance transfers (variable APR of 17.24-25.99% after that). No annual fee.
Chase Sapphire Preferred®
The Chase Sapphire Preferred® card is one of the most powerful cards on the market for those looking for a travel card. With a huge signup bonus and a universally accept rewards program, it fits almost any travelers need. This one also follows Chase's 5/24 rule, so be mindful when considering store cards - you could miss out on something better.
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®. 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases. Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. $95 annual fee.
Keep it simple
While it can be easy to be lured into a store-branded credit card with the huge discounts on your first purchase or the extra rewards and perks, but it tends to be a slippery slope into a life and wallet overstuffed with cards that end up being a strain on your time and your finances. While some cards can make sense, like the Amazon Prime Rewards Visa Signature Card (since you can shop for almost anything at Amazon), most can be replaced with one or two credit cards that earn you on the purchases you want without the limits that store cards bring.
