“Would you like to save 15 percent off today’s purchase by opening our store credit card?” We’ve probably all heard countless versions of that pitch at a retailer’s checkout counter. More than 6 in 10 U.S. adults (62 percent) have applied for a retail credit card, according to our sister site CreditCards.com. And about two-thirds of them have done so impulsively at least once.

While savings are always welcome, there can be consequences to opening store credit cards. They’re not always among the best credit cards. When do they make sense, and when should you steer clear?

What is a store credit card?

Retailers offer two types of credit cards: store credit cards and co-branded credit cards. Store credit cards, sometimes called closed-loop cards, can only be used at that particular store or chain of stores. A co-branded card, on the other hand, is an open-loop card that can be used anywhere the card network (such as Visa or Mastercard) can be accepted. It has a particular retailer’s logo on it, but it can be used widely.

Some retailers offer both. Amazon.com, for example, has a store card and the Amazon Prime Rewards Visa Signature Card. The former only works at Amazon.com, whereas the latter can be used anywhere Visa is accepted.

How are they different from general-purpose cards?

General-purpose cards — sometimes known as bank cards — have the broadest rewards programs. Depending on the card, you might be able to redeem for cash back, travel, gift cards, merchandise or something else.

If you have a store card or a co-branded card, your rewards will probably focus on perks offered by that individual retailer. These tend to focus on cash back, either as statement credits or as funds you can apply to offset future purchases.

Pros of store credit cards

  • Earn rewards: If you love a particular retailer and buy from them all the time, using their store card may get you better rewards than a general rewards credit card.
  • Bonus offers: Some store cards throw in extra bonuses such as special coupons, free alterations and invitation-only events.
  • Easy to qualify for: A good starting point if you’re looking to establish a credit history from scratch or to rebuild your credit score.

Cons of store credit cards

  • High APRs: Store cards charge an average APR of 25.77 percent, according to CreditCards.com’s 2021 poll, so the cost of carrying a balance will quickly outpace your rewards potential.
  • Potentially misleading terms: Many “0 interest” store offers are actually deferred interest promotions, meaning that if you have any remaining balance at the end of the promotional period, you’ll be charged retroactive interest on your average daily balance all the way back to the beginning.
  • Low credit limits: Store cards often have low credit limits, which can lead to a high credit utilization ratio and hurt your credit score.
  • Limited use: While they reward loyalty, store cards are limiting because you can only use them at that particular store or chain of stores.

The best store credit cards

Of course, the best store credit card will obviously depend on your spending patterns, but there are some cards that tend to be popular with some retailers and issuers. Here’s our take on some store cards that you might be interested in if you decide to go this route:

Amazon Prime Rewards Visa Signature Card*: Best for Amazon.com shopping

  • Rewards rate: 5 percent back at Amazon.com and Whole Foods Market; 2 percent back at restaurants, gas stations and drugstores; 1 percent back on all other purchases
  • Welcome offer: Up to $150 Amazon gift card upon approval
  • Annual fee: $0 ($139 Amazon Prime subscription required)
  • Regular APR: 14.24 percent to 22.24 percent variable

The Amazon Prime Rewards Visa Signature Card may sound restrictive because of the name, but, surprisingly, it’s much more flexible than the name implies. For starters, there’s a ton of merchandise you can get on Amazon.com. So even if you shop at other stores, you might find that item you want on Amazon.com to earn the 5 percent cash back. Whole Foods purchases also earn 5 percent back.

Then, the rewards apply to other places besides Amazon.com spending: Whole Foods, restaurants, gas station and drugstore purchases are also purchases that can help you earn rewards. All other purchases earn 1 percent back.

Costco Anywhere Visa Card by Citi: Best for Costco shopping

  • Rewards rate: 4 percent cash back on eligible gas and EV charging purchases (for the first $7,000 per year, then 1 percent); 3 percent back on restaurant and eligible travel purchases; 2 percent back on all Costco and Costco.com purchases; 1 percent back on all other purchases
  • Welcome offer: N/A
  • Annual fee: No annual fee with your paid Costco membership ($60)
  • Purchase intro APR: N/A
  • Regular APR: 18.99 percent variable

The Costco Anywhere Visa® Card by Citi offers a great cash back rate on Costco purchases, plus reasonable cash back on dining and eligible travel purchases. There’s no annual fee, but you must be a Costco member to get the card. The only caveat is that your cash back comes every February in the form of a reward certificate. You can redeem it at a Costco store for cash or for merchandise.

Capital One Walmart Rewards Mastercard*: Best no-annual-fee grocery rewards card

  • Rewards rate: 5 percent cash back at Walmart.com, including pickup and delivery; 2 percent back in Walmart stores and fuel stations, at restaurants and on travel; 1 percent back everywhere else Mastercard is accepted
  • Welcome offer: Earn 5 percent cash back in Walmart stores for the first 12 months when you use your Capital One Walmart Rewards Card with Walmart Pay
  • Annual fee: $0
  • Regular APR: 17.99 percent or 27.74 percent variable

The Capital One Walmart Rewards® Mastercard® is ideal for frequent Walmart shoppers. Rewards mainly apply to Walmart.com, but the welcome bonus applies to in-store purchases with Walmart Pay. After that, you’ll still get 2 percent back on in-store purchases.

This card is especially useful if you buy groceries from Walmart often. If your other rewards cards exclude Walmart from its supermarket category, the Walmart Rewards Mastercard will still deliver rewards on grocery spending at the retailer.

Target REDcard*: Best for Target shopping

  • Rewards rate: Receive 5 percent off all purchases made in Target stores or on Target.com
  • Welcome offer: N/A
  • Annual fee: No annual fee
  • Regular APR: 24.40 percent variable

The 5 percent you receive back from shopping with your Target REDcard is applied as a discount on your Target purchases. In addition to this discount, you’ll qualify for special benefits like free shipping and a longer grace period for exchanges and returns. As a REDcard holder, you can also qualify for free shipping on most items and an additional 30 days for returns and exchanges.

Are store credit cards worth it?

The short answer is sometimes. You definitely shouldn’t go all-in with store credit cards. A store credit card can be a good deal if you spend a lot with that particular retailer. However, since store cards limit your options to a specific store or chain, they’re not a great everyday option. They also tend to have especially high interest rates.

But a store card may still be the right choice for you if you know you can pay your bill in full each month. It also helps if you have at least one other general-purpose or co-branded card to cover other expenses and benefit from credit card perks such as fraud protection, no foreign transaction fees, extended warranty coverage and purchase protection.

The bottom line

Store credit cards reward loyalty, so it can be tempting to sign up for a card from your favorite retailer to cash in on special rewards and offers on spending you’re likely to do anyway. However, their niche rewards are limiting, so it’s important to have at least one credit card you can use broadly.

*All information about the Costco Anywhere Visa® Card by Citi, Amazon Prime Rewards Visa Signature Card and Target REDcard has been collected independently by Bankrate.com and has not been reviewed or approved by the issuer.