Why I Don’t Have Store Credit Cards

Store cards can provide outstanding value, but only at specific stores. Most savvy shoppers are better off buying gift cards with the Chase Freedom and Discover It during the right categories.

1. I don’t know if I’m going to keep shopping there

Your taste and style of material items change as you age. If you get a store credit card, be sure you’re going to keep shopping there. A store card should be a keeper card because they usually don’t have an annual fee, so it helps your average age of credit.

If you asked me to get a store credit card 5–10 years ago, my go-to store would be Best Buy. Flash forward to present day — I rarely shop at Best Buy. Amazon has more competitive pricing and free shipping with Prime membership. With Amazon at my fingertips, I don’t have a reason to shop at electronic stores anymore.

A few things to consider before getting a store card:

  • Will you keep shopping there long-term? For example, I like Banana Republic right now, but will I still like them in 5 years?
  • Will the store still be around in 10 years? A ton of retailers have filed bankruptcy, and I’m not sure what happens to the store credit cards.
  • Are there better alternatives to the store card that yield the same or better rewards?

2. Store cards offer short-term value

A prime example is Costco — their sign up bonus is a $4.99 rotisserie chicken. If you get lucky, they might even throw in a pack of bottled water!

Some people argue that you can get 2% back with the Executive Membership, plus an additional 2% back with the Citi Costco card. You receive 2% back with the Executive Membership, regardless of which credit card you use to pay, so you’re only getting an additional 2% with the Citi card.

Compare this to the Chase Freedom card where you can earn 5% back on wholesale categories during select quarters while earning the 2% back with the Executive Membership. That’s 3% more cash back than the Citi card.

If you use the Discover It card, you can earn 5% back on wholesale clubs during certain quarters (10% if it’s your first year)and purchase Costco cards online.

With a ton of store cards, the signup bonus can range 5–20% off your first purchase. Consider how much the first purchase has to be to get value from the card. 10% off $1,000 is $100.

A lot of no annual fee cards offer a lot a lot more cash back with a lot more flexibility.

A few examples:

  • Discover It: Earn $50 after your first purchase. At the end of the first year, all you cash back is matched — including the bonus.
  • Chase Freedom: Earn 1,500 UR points after $500 in spend within the first 3 months. If you redeem the bonus for cash or travel, it’s equivalent to $150. An even better strategy is to transfer the UR points to the Chase Sapphire Reserve if you have one. That instantly doubles the value of the points to $300 in travel.

3. Long-term value usually isn’t there

For most situations, you can get a lot more value from the Discover It or Chase Freedom card if you do it correctly.

For example, you can get the Chase Freedom instead of the Banana Republic card and still earn 5x back. The 5x categories for Q2 2017 are grocery stores and drug stores — both sell Banana Republic gift cards.

You would also need a ton of credit cards to cover all the stores you shop at. Maybe it’s Amazon, Banana Republic, Best Buy, and Costco. That’s 4 credit card vs. 1 Chase freedom. You just have to be willing to plan ahead for 5x categories.

Keep in mind, it’s not worth buying electronics with gift cards because you lose the extended warranties and protections.

What situation would I get a store card?

The only situation where it makes sense for me to get a store card is if I can get extreme value out of it.

For example, if I needed to alter my clothes often, I would consider the Banana Republic card because it comes with unlimited complimentary alterations.

At the end of the day, only apply for store credit cards if it makes sense for your situation.