Store credit cards that don’t suck

I cringe when I see a retail store employee encourage someone to sign up for the store credit card to save twelve bucks. Let’s be clear: I’m all about saving twelve bucks where I can. However, with the knowledge that a single new credit card can easily yield a bonus worth hundreds of dollars (and in some cases a thousand dollars or more), I hate to see someone get swindled into a card that won’t reward them well for becoming a cardmember and won’t offer them measurable ongoing benefit. However, not all store credit cards are bad (and indeed if you’re going to spend a ton at a particular merchant, many cards can make sense). But in my opinion, few are truly worth a long-term slot in one’s wallet. These are my picks for store cards that are worth opening.

Costco Visa or Sam’s Club  Mastercard (for gas)

If you are an avid member of either of these warehouse clubs, the Costco Anywhere Visa or Sam’s Club Mastercard can be a great solution for gas.

The Costco Anywhere Visa or Costco Anywhere Business Visa offers 4% back on eligible gas on the first $7K in purchases each year. That’s up to $280 back on gas assuming you max out the $7K spend in this category. Stacking that with already-discounted fuel prices at Costco is popular among members. Personally, I’d prefer the business version since it would be less likely to impact personal card applications with other banks.

While I’ve long known about the return on gas on the Costco card, I’d somehow missed the fact that the Sam’s Club Mastercard offers even high rewards at 5% back on eligible gas purchases – albeit up to a lesser annual cap of just $6K in purchases. Still, that’s up to $300 back each year on gas. Whether this card or the Costco card makes more sense likely just boils down to which warehouse club is more appealing to you overall (whether in terms of the price of groceries or convenience of location).

Both cards also offer 3% back on travel and dining, so either one is worth having and keeping if you are ultimately going to be a member of the club. That last part is a key sticking point: club membership is required for these cards. Further, rewards can only be redeemed once a year for a certificate to be used in-store, so there is a lot less flexibility than with other rewards cards. Correction: As pointed out by MickiSue in the comments, Costco allows the certificate to be redeemed for cash in-store.

Amazon Prime Visa Signature (for ongoing rewards at Amazon / Whole Foods)

I’m not necessarily all that big on getting a card for 5% back at a single merchant in most cases (more on that below), but Amazon is a rare exception. Given that Amazon sells nearly every kind of daily necessity (and an awful lot of items you might not need but definitely want), it has become a high spending center for many Americans. Those who already pay for an Amazon Prime membership likely spend a significant amount at Amazon. In my case, Amazon constantly shows me how much I could have gotten back if only I had the Prime Visa, and it isn’t insignificant.

But it’s not just 5% back at Amazon that makes this card worthwhile. In addition to 5% back at Amazon and Whole Foods, there are rotating opportunities to earn as much as 20% back on select items with the Prime Rewards Visa. For example, we have seen instances where Amazon has offered 20% back to the tune of hundreds of dollars on popular electronics items during the holiday shopping season.

I don’t necessarily think that it is worth joining Amazon Prime explicitly for this Visa card, but for those who would already buy a membership the card can easily make sense.

Capital One Walmart Rewards card (for 5% back at Walmart.com including pickup/delivery, 5% first year in-store using Walmart Pay)

The Capital One Walmart Rewards card is yet another card that offers 5% back on merchant-specific purchases — in this case 5% back on Walmart.com orders (including pickup or delivery). It also offers 5% back in-store for the first year, but only when checking out via the Walmart Pay app.

Those who do their regular shopping at Walmart could very likely see a measurable enough difference each year with this card, but the big bummer here is that the card only offers 2% back in-store after the first year. Given that there are quite a few cards that offer 2% back everywhere with no annual fee, there isn’t any particular reason to use this card in-store over other options in your wallet. However, given the rise in popularity for online ordering for store pick up, I could see this card being appealing for those who will earn 5% on most Walmart purchases.

Banana Republic Visa (for big spending offers)

The Banana Republic Visa is one that has held a special place in the hearts of heavy spenders for quite a few years. Honestly, I couldn’t even tell you what this card earns for regular purchases because that’s not why most people in the rewards community have it. Rather, it is for the regular big spending bonuses that this card offers for purchases outside of Banana Republic and its associated brands (Gap / Old Navy). While I haven’t heard much noise on this card during 2020, in years past we have pretty frequently seen bonus spending offers in the 10x-20x points-per-dollar range and often at merchants like grocery stores where it can be easy to ramp up spend. Given that I haven’t seen much reported on the card this year, and given the overall state of retail at the moment, I wouldn’t necessarily be in a rush to open this card right now. Still, this is a good one to keep an eye on.

Note that I believe that rewards can only be used for certificates to be used in-store (or perhaps online?) with Banana Republic / Gap / Old Navy, so you’re somewhat limited in how you can use rewards. Still, everybody needs clothes.

Sears Mastercard (that earns ThankYou points)

Sears has a Mastercard that earns Shop Your Way points and that card is likely a total snoozer for most. However, there is also a Sears Mastercard that earns ThankYou points. That version of the card is no longer available for new applicants. I furthermore don’t think it is easy to get the card as a product change option, though it may be possible in some circumstances.

Regardless of whether you can get the card today or not, it definitely doesn’t suck and is a good example of the type of opportunity worth catching when you see it: it is a store-branded card, but it doesn’t earn store-branded rewards. It only offers 1x Citi ThankYou points per dollar on most purchases, but we’ve seen spending offers as high as 11x on up to $9K in purchases at merchants like gas stations and grocery stores. Given Citi ThankYou sweet spots, that’s a great deal.

Again, you may not be able to get this card anymore. I further don’t know when we’ll see another opportunity to pick up a store card that earns a transferable currency, but it isn’t unprecedented: Citi’s AT&T Access card earns ThankYou points and the no-longer-available AT&T Access More card offers 3x ThankYou points for online retail and travel purchases. Again, that card (the Access More) isn’t available anymore (neither through application nor product change), but both cards remind me that sometimes a store card is better than you’d expect it to be.

Store credit cards that aren’t as good as they look

Lowes credit card

Regular DIYers have probably been wondering how I haven’t yet included the Lowe’s credit card, which gives 5% off Lowes purchases. There is no doubt that savings can really add up when you’re doing a remodel.

On the flip side, I didn’t include it above because we frequently see opportunities throughout the year to pick up Lowes gift cards at a discount of 10%. Sam’s Club had $100 Lowes cards for $85 for Cyber Monday and they hadn’t sold out as of late last night. In that case, there was a limit of 2 per customer, but we often see the ability to pick up a few hundred in Lowes gift cards for 10% off (or sometimes Amex Offers for 10% back on up to $1K in spend). Again, if you’re doing a major home remodel and spending thousands (and you want to be able to return those kitchen cabinets you no longer want for a refund without the hassle of dealing with huge Lowes gift card credits), the credit card can make sense. But for regular small purchases, I don’t find the 5% discount very compelling.

Target REDCard credit card

The TargetREDCard credit card offers 5% off on most Target purchases. That sounds great in theory and might otherwise be up there with the Amazon and Walmart credit cards above if not for the fact that you can get the same return with the Target REDCard debit card. There is no need to open a credit card for this benefit given that you can link your checking account to the debit card and get the same 5% off.

Most store cards that give you 5% back within brand

I don’t get excited about most store credit cards that offer 5% back at one merchant only. My parents provide a good example here: They aren’t into credit cards at all. Despite the massive rewards that my wife and I earn each year, my parents just have no interest in opening new cards (for most of my life, they had a single credit card). It therefore really surprised me a couple of years ago when I heard that they had opened a department store credit card. Their rationale? It gives 5% back at the store and they spend a lot there. My eye roll must have been audible.

If this is a rationale that has made you consider getting a store credit card, ask yourself just how much you spend at that store in an average year. Then compare how much cash back you could earn at 5% over the course of the year versus what you could have earned by opening a single credit card and earning a good new cardmember bonus. If you will come out well ahead with the store card, by all means go that route. But in many cases, you could beat the store card return by considering opening a new general rewards credit card with a good bonus every now and then.

Let’s for a moment consider the awesome 75K bonuses available on the Chase Ink Cash and Chase Ink Unlimited cards. That kind of bonus is worth $750 in straight cash back on either card. If you hold a premium or ultra-premium Chase card also, the 75K bonus on either Ink card could be worth more than $900 or more than $1100 toward groceries or home improvement supplies. That is an amazing offer for a credit card with no annual fee.

Now consider how much my parents would need to spend at the department store to equal the return possible from the welcome bonus alone on just one of those Ink cards: In order to earn $750 cash back, they would need to spend $15,000 at that single department store to earn a return of 5% on their store credit card. My mom likes to shop, but she definitely doesn’t spend that much at one store in a year; I would venture to guess that it may be several years before she earns what she could have earned with one welcome bonus (with all of her spend on the card for the first few months counting toward that big cash back bonus). Of course, the Ink offers mentioned above are well above average, but one could easily keep their eye out for above-average offers to come out ahead of the store card.

And thus I don’t get very excited over most store credit cards for the couple of percent extra you can earn on-brand. In my opinion, cards from the likes of Amazon and Walmart are exceptions since they sell such a wide range of items that it is more likely that those customers considering their cards do indeed spend a significant sum at those stores. However, on average, I think most consumers probably don’t spend a significant enough amount to make a store card that earns 5% back on-brand a measurable long-term win (especially as compared to opening perhaps one new credit card per year for a welcome bonus).

Again, there are exceptions. I’ve long been a Kohl’s cardholder because there was a time when I regularly shopped at Kohl’s. I was mostly shopping for resale items, but I can also see how a family may benefit from the regular coupons and stacking discounts available for Kohl’s cardholders. And as noted above, the Lowes credit card might make sense for someone going through a big remodel who also values flexibility. All of the above is meant as my general opinions, but I do recognize that there are exceptional circumstances.

Bottom line

When you’re standing in a checkout line and the store associate asks if you would like to save 20% on today’s purchase, it is rarely worthwhile compared to instead finding a card on our Best Credit Card Offers page that comes with a welcome bonus worth a couple hundred dollars or more. However, there are some store credit cards that offer good ongoing rewards that are worth having and holding. An entirely different question is whether any of these cards are worth a 5/24 slot – in most cases, they clearly wouldn’t given the absence of a worthwhile new cardmember offer. But for those already over 5/24 who spend enough in the right categories, some store credit cards are worth considering.

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