Without fail, it happens every time you check out at a major retailer: The credit card offer. But is a store card a good first credit card?

Everywhere you shop, cashiers probably ask if you would like to apply for a store credit card. These cards are everywhere, and if you relent and apply for the card, retailers can offer you valuable discounts.

But is a store card a good first credit card?

The advantages of starting with a store credit card

Store credit cards can represent the proverbial first rung of the ladder when you are trying to build a credit history. Compared to other reward cards offered by major banks, it’s usually much easier to get approved for a store credit card, especially when you have little or no credit history. And just as with any other credit card, you can build your credit history and credit score very quickly when you make all of your payments on time.

In addition, having a store credit card usually gives you the chance to receive discounts, coupons, and other promotions. One of the reasons that stores are so aggressive in promoting their cards is because it’s an opportunity to send you marketing materials. This can be a good thing if you want these coupons, but an annoyance if you don’t.

Finally, some first-time credit card users might find it helpful to have a store card that’s not part of a larger payment network like Visa or MasterCard. Since you can’t use the store card anywhere you want, it may help you avoid going into debt.

The drawbacks of having a store credit card as your first card

While a store credit card can make a good first card for some people, it can have a few downsides.

First, store credit cards tend to have higher interest rates and fees than cards that are offered directly by the banks. That’s because these cards are offered to customers with limited credit history, or even damaged credit.

Having a store credit card can lead you to shop more at that store, even when better prices are available elsewhere. Essentially, a store credit card is an advertisement for the store that you carry in your wallet every day.

Furthermore, some store credit cards feature promotional offers called deferred credit financing. These offers allow you to avoid interest charges when you pay the entire balance in full within a certain time period. Unlike most credit cards with 0 percent APR financing, however, these cards can charge you interest retroactively, going back to your purchase date, if you fail to pay everything off in time. This makes the possibility makes deferred interest financing a very risky and undesirable option.

Alternatives to store credit cards

Just because you’ve never had a credit card before, it doesn’t mean that you have to start with store card. Banks offer credit cards that are specifically designed for people who have never had a card before.

These entry-level credit cards have simple terms, and many don’t even offer rewards. For a first credit card, not having rewards can be a feature rather than a bug. When you are just starting out, you really don’t need any incentive to spend more money. Most store credit cards, on the other hand, are part of some kind of loyalty program that rewards you for your spending.

If you are still in college, then there are several credit cards specifically marketed to college students that reward you for being responsible. For example, the Capital One Journey Student Credit Card offers you additional rewards each month when you pay on time.

Another advantage of having a non-store card is that you can use it to build a relationship with your bank, and quickly move up to a more competitive card. When you have a credit card issued by the same bank that also has your checking account, you can manage everything from one login. This way, you can make your credit card payments simply by transferring funds between accounts, not by sending payments to another institution.

Finally, credit cards issued directly by banks will likely have additional cardholder benefits not found with store credit cards. For example, many cards issued directly by banks offer fraud monitoring, extended warranty coverage, and 90 days of damage and theft protection, all at no extra cost.


There are few things as reliable as being offered a store credit card every time you go shopping, but these products don’t necessarily make the best choice for your first credit card. By considering exactly how you will use the card, and what the alternatives are, you can make the right choice for your needs.

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About the author

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Jason Steele has been writing about credit cards, travel and personal finance since 2008, and is passionate about using his cards to travel for free. Jason contributes to many of the top personal finance and travel sites and has been widely quoted in mainstream media as a credit card expert. Jason lives in Denver Colorado where he enjoys bicycling, snowboarding and flying. You can follow Jason on Twitter, Facebook or on his website.