Retail and Store Cards Overview

What Are Store Cards?

Store cards (retail cards) are credit cards issued by retailers for use at their stores. They often have easier approval requirements than major credit cards.

Types of Store Cards

Closed-Loop Cards

Can only be used at the issuing retailer. Examples: Target REDcard, Amazon Store Card.

Open-Loop Cards

Can be used anywhere that accepts the network (Visa, Mastercard). Examples: Target Mastercard, Amazon Prime Visa.

Benefits for Credit Building

Easier Approval

Store cards typically have less stringent approval requirements than traditional credit cards.

Lower Credit Score Requirements

Many approve applicants with scores in the 580-640 range.

Special Financing Offers

0% APR promotions for large purchases (furniture, electronics).

Immediate Discounts

Often receive 10-20% off first purchase upon approval.

Drawbacks to Consider

Limited Usefulness

Closed-loop cards can only be used at one retailer, reducing their utility.

Higher Interest Rates

APRs often range from 25-30%, higher than traditional cards.

Temptation to Overspend

Easy approval and instant discounts can lead to unnecessary purchases.

Deferred Interest Traps

Special financing often charges backdated interest if not paid off in time.

Best Practices for Store Cards

Choose Stores You Use Regularly

Only apply for cards at stores where you already shop frequently.

Treat Like Regular Credit

Same rules apply: pay on time, keep utilization low, pay in full.

Avoid Special Financing

Unless you're certain you can pay off before the promotional period ends.

Don't Apply for Multiple Store Cards

Too many inquiries and new accounts hurt your score.

Store Cards for Building Credit

Starter Strategy

Use as a stepping stone if secured cards are too difficult to obtain.

Supplemental Strategy

Add one store card to diversify your credit mix alongside a secured card.

Graduation Strategy

After 6-12 months of good history with a store card, apply for traditional credit cards.

Reporting to Credit Bureaus

Verify before applying that the card reports to all three bureaus. Most major retailers do, but smaller stores may not.

Popular Store Cards for Building

Good Options

• Target REDcard (reports to all three bureaus)
• Walmart Credit Card (reports to all three)
• Amazon Store Card (reports to all three)
• Macy's Card (easier approval)

Considerations

• Approval requirements
• Whether open or closed-loop
• Annual fees (most have none)
• Rewards structure
• Credit bureau reporting

When to Avoid Store Cards

• You don't shop at that store regularly
• You're trying to minimize hard inquiries
• You have access to better credit building options
• You're prone to overspending
• The card doesn't report to all three bureaus