Store Credit Cards vs. General Credit Cards: What's the Difference?

Many of the largest retailers offer store credit cards of their own, including huge brands like Amazon.com, Kohl's, and Walmart. Unlike traditional “general” credit cards that operate on major card networks such as Mastercard or Visa, most store credit cards can only be used at a single retailer or family of stores owned by that retailer.

With limited ways to use a store credit card, you may be wondering why anyone would sign up for one. In fact, if you’re a regular customer of one of these retailers, you can gain major benefits from that company’s card—whether it’s building credit or accessing special discounts and rewards when you shop there.

Read on to learn how these two card types differ and why you might choose one over the other.

Store cards vs. regular credit cards compared

First you need to know which type of store credit card you’re considering. There are two types: Some of the best store credit cards are open-loop credit cards—meaning they can be used anywhere the payment network is supported. By contrast, closed-loop cards can be used only in specific stores.

A single retailer can offer both types. Consider the My Best Buy Visa® Card and the My Best Buy® Credit Card. Both are store credit cards, but the Visa version of the card is an open-loop card that can be used anywhere Visa is accepted around the world. By contrast, the My Best Buy® Credit Card is a closed-loop card that can only be used at Best Buy.

This guide delves into the pros and cons of closed-loop store credit cards only. The chart below compares these card types based on some of their major features and how they stack up compared to general credit cards, the kind you can use anywhere credit is accepted. Open-loop store cards are general cards, although they likely come with some special benefits at the retailer that sponsors them.

Advantages of store credit cards

Store credit cards are popular, which is probably why there are so many available today. Major card issuer Synchrony Bank offers cards for such retailers as American Eagle and JC Penney and brands including Mattress Firm and Rooms to Go.

Why do consumers love store credit cards? The following reasons can apply.

Easier to get approval

Store credit cards tend to come with low limits, and the limited range of use they allow makes them less risky overall. This allows card issuers to approve a wider range of applicants that may include people with poor credit or limited credit history. This is why store credit cards are often the first credit cards many consumers have.

May qualify you for discounts and other promotions

Many people sign up for a store credit card at the point of sale in order to get a discount on an especially large purchase. For example, the Kohl's credit card offers 35% off your first order when you are approved for the card while making a purchase. And the Amazon Prime store credit card gives users a gift card upon account approval as an incentive to sign up.

Some store credit cards also offer ongoing promotions to their credit card customers, including special discounts and deals, free shipping, and more.

Can be paired with a store's loyalty program

Stores with loyalty programs tend to offer customers rewards regardless of how they pay for purchases. But having a store credit card can help consumers accelerate the rewards earned on each dollar they spend.

As just one example, the Macy's store credit card helps members earn more Star Rewards points for each dollar they spend as they climb the loyalty tiers. Members who spend $1 to $499 per year at the store with their Macy's card earn one point per dollar spent. Members who spend $500 to $1,199 per year achieve Gold status and earn three points per dollar spent and those who spend more than $1,200 annually achieve Platinum status and earn five points per dollar spent at Macy's stores.

Many come with no annual fee

The majority of store credit cards charge no annual fee, which makes sense when you consider their limited range of use. That also makes store cards a good choice as starter credit cards for people looking to build a credit history and score.

Limitations of store cards

While store cards definitely have their benefits, there are plenty of reasons they shouldn't be the only credit card you have. Potential downsides and limitations include the following:

Not helpful for emergencies

A store credit card from a retail brand won't be very helpful if you have an emergency expense to cover or you need to make an unexpected purchase. You won’t run into that problem using a traditional credit card that runs on a network like Mastercard or Visa. If credit is an option, you’ll be able to use your traditional card.

Can only be used in one place

Store credit cards won’t help if you want to comparison-shop at different stores before you make a purchase and end up preferring to purchase outside the store your card is tied to. If you find a shirt you want to buy at American Eagle, for example, having a store credit card tied to Amazon.com isn't going to help.

Higher interest rates

Store credit cards are also known for their exceptionally high interest rates for carrying a balance from one month to the next. You can avoid interest charges by paying your credit card statement balance in full by your due date, but that may not always be an option. Conversely, there are traditional rewards cards that offer 0% APR for purchases, balance transfers, or both for a limited time.

Limited redemptions for rewards earned

Also keep in mind that rewards earned with store cards are typically only good for free merchandise from the store or a brand of stores. If you earn rewards on electronics purchases with the My Best Buy Visa® Card or the My Best Buy® Credit Card, for example, they are redeemable only for certificates for in-store purchases.

When is a store card the best choice?

With the pros and cons of store credit cards in mind, you may be wondering when it makes sense to get one. Here's a rundown of common scenarios where this type of card makes sense.

You need a starter credit card

If you need a beginner credit card that will help you learn positive credit habits and build your credit history—and you don't want a secured credit card that requires a refundable cash deposit as collateral—store cards provide a thoughtful alternative. The initial credit limit will likely be on the low end if you have limited credit history, but you'll still get the chance to build credit with responsible use and on-time payments.

You frequently shop at a specific store

Whether you're new to building credit or not, having a store credit card can help you unlock special benefits. You may get access to special deals and discounts, free shipping on certain purchases, more rewards for each dollar you spend, and other perks as a store card holder.

You're being incentivized to sign up

There are also times when consumers get talked into signing up for a store card at the point of sale, usually because they're making a large purchase and want a big discount right off the bat.

For example, the My Best Buy Visa® Card and the My Best Buy® Credit Card offer new cardholders 10% back in rewards on their first purchase with no limitations on how much they can spend and earn. This kind of offer can be especially fruitful at a store like Best Buy where consumers may be spending thousands of dollars on new electronics, new appliances for their home, or other expensive purchases.

TIME Stamp: Store cards are good companion credit cards

While closed-loop store credit cards won't help you in an emergency due to their limited scope of use, they can still make sense for consumers who often shop at a specific store or family of stores. The key to getting the most from store credit cards is making sure they're not the only type of card you have.

Our advice? Sign up for the store cards you could benefit the most from, particularly if you spend a lot of money at specific retailers and want access to discounts and other perks. When you get one of these cards, find out whether it is closed-loop or open-loop. If it’s a closed-loop card, try to make sure you also have at least one general credit card that you can use for emergency expenses. A rewards credit card or cash back credit card can help you earn more rewards on all your regular spending and some bills, and you’ll have more ways to actually use your rewards in the end.

Frequently asked questions (FAQs)

Is it better to get a store credit card or a regular credit card?

Store credit cards may be limited in terms of how you can use them, but the special discounts and promotions they offer can make signing up well worth it. That said, you'll want to have a traditional general credit card as well. That way, you have a line of credit to access in emergencies. You can also use a general credit card to earn rewards on regular purchases and bills you pay with credit.

What's the difference between a store card and a credit card?

Store credit cards that operate on a closed loop can be used only within a specific store or family of stores. General credit cards can be used anywhere credit cards from the card network are accepted around the world.

Is there a downside to getting store credit cards?

Potential downsides of store credit cards include that you can use them only in specific stores, their high interest rates, and the low credit limits they offer consumers—especially at first. You can get around these downsides by always paying your balance in full to avoid interest and making sure you always also have a general credit card to use for other purposes.

What is a general credit card?

A general credit card is one that runs on a major card network such as American Express, Discover, Mastercard, or Visa. These cards can be used for purchases around the world provided they are accepted as a form of payment in that country or shop.