When you shop at your favorite store and approach the checkout line, the aisle is often stocked with snacks and drinks that the retailer is trying to entice you to purchase. But even when you successfully bypass these last-minute impulse purchases, the cashier may deliver a persuasive pitch asking you to sign up for a new store credit card.
Many retailers try to convince you to open a credit card at checkout by offering a discount, typically around 15% to 25% off your current purchase if you're approved. The potential savings may be alluring, especially if you frequently shop at the store.
While many experts warn against opening store cards due to high APRs, some of these cards come with nice perks, including free shipping, everyday discounts and special financing offers. It's OK to open one as long as you're always sure you can pay on time and in full to avoid high interest rates.
There are two types of store cards, a traditional store card that can only be used at specific properties owned by the retailer displayed on the front of the card, and a co-branded card that is backed by a major card network and can be used virtually anywhere.
For instance, the Target RedCard™ is a store card that can only be used at Target. Whereas the Costco Anywhere Visa® Card by Citi is a co-branded card backed by the Visa network, so you can use it outside of Costco properties. All of the cards mentioned below can only be used at the given store, except for the Costco card which can be used anywhere Visa is accepted.
CNBC Select compared credit cards from popular stores to find the best cards for consumers who shop at a variety of online merchants, big box retailers, warehouse clubs and home improvement stores.
Below, we list the best store credit cards that provide rewards, special financing offers and free shipping perks that make opening a store-specific card worthwhile.
5% discount at checkout on most purchases in-store and at Target.com
No current offer
Who's this for? If you love going on Target runs, you may want to add the Target RedCard™ to your wallet. Cardholders get a 5% discount on most purchases, from groceries to clothing. This discount is unique because you receive it instantly at checkout, compared to other cards that reward you with cash back or points that need to be redeemed later.
In addition to a 5% discount, you can benefit from a variety of additional perks, such as free two-day shipping on hundreds of thousands of items from Target.com and an additional 30 days for returns and exchanges.
RedCard holders receive exclusive access to new product launches and a coupon for 10% off a purchase every account anniversary year if you sign up for Target marketing emails.
Learn more: Read the full Target RedCard review.
5% back at Walmart.com and on the Walmart app; 2% back at Walmart stores, Walmart and Murphy USA fuel stations
5% back on in-store purchases when using Walmart Pay for the first 12 months after approval (after, earn 2%)
Who's this for? The Walmart Rewards Card can help you maximize savings by earning rewards while also benefiting from the store's everyday low prices. Cardholders earn 5% cash back at Walmart.com and on the Walmart app and 2% cash back at Walmart stores, Walmart and Murphy USA fuel stations.
While the Walmart Rewards Card has a lower rewards rate for in-store purchases compared to online and app transactions, you can earn 5% back on in-store purchases made using Walmart Pay during the first 12 months from account opening.
This card can only be used at Walmart properties, but if you want a Walmart card with wider use, consider the Capital One® Walmart Rewards™ Card, which can be used anywhere Mastercard is accepted. The Capital One Walmart card provides the same rewards as the store card, plus 2% cash back on restaurants and travel purchases and 1% cash back on other purchases.
Learn more: Walmart credit card reviews
5% back on Amazon.com
$10 Amazon gift card upon approval
Pay no interest on all Amazon purchases of $150 or more if the entire purchase amount is paid in full within 6, 12 or 24 months
Who's this for? Amazon aficionados with a Prime membership should consider opening the Amazon Prime Store Card. You can earn a high 5% cash back on Amazon.com purchases (though you don't earn cash back at other Amazon-owned properties, such as Whole Foods).
This card also offers special financing offers that can provide interest-free financing for six, 12, or 24 months. See below for the offers.
Cardholders need to pay off the entire balance before the interest-free period ends in order to avoid deferred interest, which is a charge for all the interest you accrued during the special financing period.
You also have to choose between earning 5% cash back or using the promotional financing period. You can't use both perks together.
If you don't have a Prime membership, you can apply for the Amazon Store Card, which provides the same special financing offers but no rewards. And if you want a card that can be used virtually anywhere, check out the Amazon Prime Rewards Visa Signature Card and the Amazon Rewards Visa Signature Card.
Learn more: See how all the Amazon credit card stack up.
4% cash back on eligible gas for the first $7,000 per year (then 1%); 3% cash back on restaurants and eligible travel purchases; 2% cash back on all other purchases from Costco and Costco.com; 1% cash back on all other purchases
No current offer
$0, Costco membership required
N/A for purchases and balance transfers
15.24% variable on purchases and balance transfers
Either $5 or 3% of the amount of each transfer, whichever is greater
Who's this for? Costco members can benefit from using the Costco Anywhere Visa® Card by Citi while stocking up at the warehouse store and making purchases outside of Costco. Cardholders earn 4% cash back on eligible gas purchases for the first $7,000 per year (then 1%), 3% cash back on restaurants and eligible travel purchases, 2% cash back on eligible purchases from Costco and Costco.com and 1% cash back on all other purchases.
While you can earn a generous amount of cash back with this card, there are limitations to how you can redeem rewards. You earn an annual reward certificate once a year after your February billing cycle ends, but it's only redeemable at U.S. Costco Warehouses. Learn more about how to redeem Costco credit card rewards.
Since this is a co-branded card, there are a number of additional perks, such as travel and emergency assistance, worldwide travel accident insurance and worldwide car rental insurance.
You need to be a Costco member and maintain an active membership to open this card. Membership currently costs $60 (Gold Star) or $120 (Executive) per year.
Learn more: Here are the best credit cards for Costco.
5% off eligible purchases
Save 10% on a qualifying purchase, up to $100. Valid though 7/31/20
Who's this for? If you plan on doing home renovations or shop frequently at a home improvement store, you should consider the Lowe's Advantage Card. You can benefit from special financing offers and 5% off eligible purchases.
You can take advantage of no interest on purchases of $299 or more that are paid in full within six months. There are also occasional project financing offers at fixed-rates for 36, 60 or 84 months on purchases of $2,000 or greater.
Similar to the Amazon Prime Store Card, you can't combine the 5% discount with a special financing offer. And if you don't pay your balance before the no-interest period ends, you'll incur deferred interest.
To determine which credit cards offer the best value, CNBC Select analyzed popular store credit cards available in the U.S. We compared each card on a range of features, including rewards, welcome bonus, introductory and standard APR, balance transfer fee and foreign transaction fees, as well as factors such as required credit and customer reviews when available. We also considered additional perks, the application process and how easy it is for the consumer to redeem points.
CNBC Select teamed up with location intelligence firm Esri. The company's data development team provided the most up-to-date and comprehensive consumer spending data based on the 2019 Consumer Expenditure Surveys from the Bureau of Labor Statistics. You can read more about their methodology here.
Esri's data team created a sample annual budget of approximately $22,126 in retail spending. The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953). General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, and other vehicle expenses.
CNBC Select used this budget to estimate how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee.
While the five-year estimates we've included are derived from a budget similar to the average American's spending, you may earn a higher or lower return depending on your shopping habits.
Information about the Target RedCard™, Walmart Rewards Card, Amazon credit cards and Lowe's Advantage Card has been collected independently by CNBC and has not been reviewed or provided by the issuers of the cards prior to publication.