Should I get a store credit card?

Store credit cards—like those from grocery stores or even coffee shops—can seem like a smart way to save money while shopping. Signing up may earn you bonus points, cash back, or exclusive discounts. But these cards are more than just loyalty programs; they're real credit cards that come with real consequences if they’re not paid. Store credit cards can lead to high-interest debt, damage to your credit score, and can create financial stress that can be hard to manage.

What’s a store credit card?

A store credit card is different from a rewards or loyalty card. A loyalty card might give you discounts, points, or other perks—but they don’t let you borrow money.

Store credit cards function exactly like your regular credit card. They require a credit check, they charge interest if you don’t pay off the balance in full, and they can impact your credit score.

In Canada, most retailers co-brand their store cards. This means the retailer partners with a major credit card company such as Visa or Mastercard. You can use them anywhere, but the store that issued the card usually ties the perks and benefits to your purchases from their store.

Why do stores offer credit cards?

Large retailers and smaller businesses are always looking for ways to gain and keep customer loyalty—and make money. Store credit cards are designed to:

• Encourage spending: you’re more likely to shop where you get discounts, cashback, or earn points that can be redeemed.

• Build loyalty: if you have points or discounts at a certain store, you’re more likely to continue shopping there compared to a different store where you don’t receive these same perks.

• Boost profits: the store might make money off the application, annual fees or receive a portion of the interest if you fall behind on monthly payments.

What are the benefits of getting a store credit card?

Some credit cards offer appealing benefits—especially if you shop regularly at the same retailer. Stores may tie their best rewards to their credit card programs, letting you earn more points, cashback, or instant discounts at checkout.

Store credit cards are often easier to qualify for than traditional credit cards, which makes them a tempting option if you have a low credit score or you’re trying to rebuild your credit after a financial setback.

What are the risks of store credit cards?

These cards might seem appealing at checkout, but they might not be your best option. Most store credit cards have much higher interest rates than traditional credit cards, which means falling behind on payments can get expensive fast. If you’ve signed up for multiple store cards, it’s easy to forget a due date or lose track of balances.

Store credit cards also tend to have lower credit limits, which can lead to high utilization that can hurt your credit score. For example, spending $400 on a card with a $500 limit means you’ve used 80% of your available credit, while the same purchase on a card with a $2,000 limit would only be 20%. This matters because credit card companies typically focus on your utilization rate—not the dollar amount spent—when assessing your creditworthiness.

On top of that, store credit cards may also come with extra fees like account setup charges, annual fees, or penalties for late payments and cash advances. While signing up might take just a few minutes at the register, cancelling can be a hassle. You’ll likely need to call customer service and ensure you pay off the balance and any interest before you can close the account.

Do store credit cards affect your credit score?

Yes. Store credit cards report to credit bureaus like any other credit card. They also run a credit check when you apply which can decrease your score. Having multiple credit cards can make you look high risk to lenders, so multiple store cards can limit your ability to qualify for other loans or credit.

Should you get a store credit card?

The answer to “should I get a store credit card?” depends on how you're going to use it. There are plenty of options for credit cards out there, but which one to get depends on your individual goals. If you’re trying to manage debt or reign in bad spending habits, consider using a secured credit card instead. These are great for rebuilding credit after a bankruptcy or consumer proposal.

Prepaid cards are a good option for those that require the functionality of a credit card (such as online shopping), but they don’t have interest, and you won’t accumulate any debt.

If you’re thinking about getting a store credit card, consider these debt warning signs—and try asking yourself these 5 questions to better understand if getting that store credit card is the best option for you:

• Can I afford to pay the balance in full every month?
• Is the interest rate higher than my current credit card?
• Will this card help or hurt my credit score?
• Am I signing up just for today’s discount or perk?
• Do I need another credit card?

If you answered no to any of these—hold off. No discount is worth the long-term debt.

If you’re already caught up in overspending or have credit card debt piling up, there are solutions. Book a free consultation and talk to one of our debt solutions professionals to understand the best option for you.