Can you use store credit cards anywhere?

You've likely stood at the checkout counter of a retail store and been asked, “Would you like to save on your purchase today by signing up for our store credit card?" It can be tempting to agree in that moment, especially knowing there's a chance for immediate savings. 

Before signing up however, make sure you fully understand the limitations of where you can use this card as well as potential implications to your credit score. In this article, you'll learn the following:

• What is a store credit card
• Can you use store credit cards any other places
• Understand the difference between a store card and a co-branded credit card
• Advantages and disadvantages of store credit cards
• Should you open a store credit card or not

What is a store credit card?

A store card is a credit card that can only be used in a specific store or group of stores. For example, if you have a store card with the apparel retailer Gap, you may be able to use it within their network of brands, which include Old Navy, Banana Republic and Athleta, but nowhere else. 

Don't confuse this with a store loyalty card, which is a rewards program that lets you earn points when you spend in that particular store. Customers who join loyalty programs will typically receive exclusive emails with coupons or opportunities to earn rewards, and a credit card is not required to earn them. 

Unlike loyalty cards, store credit cards allow you to borrow money. This means you will accrue interest charges if you do not pay your bill in full each month. The advantage for the store is that cardmembers are incentivized to shop within their retail ecosystem. The advantage for cardmembers is that they receive exclusive promotions, discounts and perks. 

Be aware that store credit cards typically carry higher annual percentage rates (APR) and lower credit limits than other credit cards because they are easier to get approved for.

Can you use store credit cards any other places?

No, store credit cards can only be used at specific stores (both in-store and online). Retailers partner with banks to offer lines of credit to their customers and it's limited to that retail store only.

What is the difference between a store card and a co-branded credit card?

While store cards and co-branded cards are both credit cards that offer lines of credit, there are some key differences.

Co-branded credit cards

A co-branded credit card is a partnership between a card network (such as Visa, Mastercard, American Express or Discover), a card issuer or bank (such as Chase) and a retailer or other brand. You can use these credit cards anywhere you shop, not just with the brand that the card is associated with. They best serve consumers who are loyal to a particular brand and want to earn rewards or perks by using that credit card for the majority of their purchases. 

Co-branded cards usually have the brand's logo and name on the card as well as a Visa, Mastercard, American Express or Discover logo. Chase has many co-branded cards to choose from including:

• The Instacart Mastercard^®
• The Amazon Prime Rewards Visa Card
• The United℠ Explorer Card
• The Disney^® Premier Visa^® Card
• The Marriott Bonvoy Boundless^® Credit Card

Store credit cards

A store credit card is a partnership between a bank and a retailer. You can only use these cards at the store or family of stores the card is associated with. They best serve consumers who frequently shop at that retailer and want to take advantage of the exclusive benefits that store cardmembers receive.

Advantages and disadvantages of store credit cards

As with any time you're considering applying for credit, you'll want to weigh the advantages and disadvantages.

Advantages

• Easier to get approved: Since store cards are only valid at the specific brand or family of stores, there's less risk to the lender, making it easier to get approved. You may even get approved at the point of sale. 
• Sign-up discounts: Many retailers offer a discount, special financing or other promotions when you are approved. 
• Cardmember perks: For some cards, you can get exclusive perks such as free shipping, birthday surprises and early access to sales. Pair this with the store's loyalty rewards program and you may find great value in staying loyal to them. 
• Builds credit history: If used wisely and paid off consistently, your payment history on a store credit card may help you build credit history and potentially boost your credit score. 
• No annual fee: Unlike some general purpose credit cards, store cards usually don't charge an annual fee.

Disadvantages

• Limited use: Store cards cannot be used outside of their store or family of brands, limiting the ways you can use that line of credit. 
• Lower credit limit: To mitigate risk, store cards tend to have lower credit limits. This could affect your credit utilization ratio in a negative way. High interest rates: Again to mitigate risk, store cards usually come with a higher-than-usual APR. Unless you pay off your bill in full at the end of each billing cycle, you may incur larger interest charges than you're used to. 
• Inflexible rewards: Unlike a general rewards credit card where you can earn points or miles on every purchase, the rewards you earn and redeem through a store card are exclusively limited to that retailer. 
• Credit score may be affected: If you miss a payment or do not pay the minimum amount due at the end of the billing cycle, your credit score may be negatively impacted.

Should you open a store credit card?

If you have responsible spending habits and your credit utilization isn't too high, a store card might be a valuable asset - especially if you are making a large purchase or frequently shop at that store. In addition, if you are trying to improve your credit score and feel confident you can pay off your balance each billing cycle, a store credit card might be helpful to have in your wallet. 

You shouldn't, however, open a store card if you can't afford to pay at least the minimum payment, struggle with consistent payments or have significant outstanding debt. A new card will show up on your credit report. If you use a large chunk of your credit line in addition to having outstanding balances on other cards, it may push your credit utilization ratio up high. Always be sure to research the APR and any fees associated with a store card before signing up.

In conclusion

Store credit cards may offer benefits that reward shoppers for their loyalty. But before you apply, think about how often you'll shop at that store and consider if the additional credit is worth it. With a higher APR and limited places to use the card, you may be better off with a rewards credit card that can be used virtually anywhere.