Walmart Credit Card Review: Earn up to 5% back at Walmart, with a catch

Walmart shoppers may want to consider opening one of the store's credit cards to maximize savings at the popular retailer.

Walmart partnered with Capital One in September 2019 for two credit cards: the co-branded Capital One Walmart Rewards® Mastercard®* and the private-label Walmart Rewards™ Card.

Both cards offer up to 5% back and come with no annual fee. So you may not know which card to choose, since they're so similar.

To make the decision easier, Select dives into the similarities and differences of both Walmart credit cards so you can choose the best card for your needs.

• Where you can use Walmart credit cards
• Walmart credit card rewards
• Additional benefits
• Fees
• Bottom line

Most credit cards can be used anywhere the card network (Visa, Mastercard, American Express or Discover) is accepted, but some cards have limitations. Credit cards with restricted use are known as private-label cards or store cards and can only be used at the namesake brand's properties.

Since the Walmart Rewards™ Card* is a private-label card, you can only use the card at Walmart properties, which include Walmart.com, the Walmart app, Walmart stores and Murphy USA gas stations.

On the other hand, the Capital One Walmart Rewards® Mastercard®* can be used anywhere Mastercard is accepted.

If you're looking for a credit card that can be used anywhere, the Capital One Walmart Rewards® Mastercard®* provides more flexibility than the Walmart Rewards™ Card.

Each Walmart credit card offers the same base rewards, but the Capital One Walmart Rewards® Mastercard® offers a more in-depth rewards program.

Both cards offer:

• 5% back on purchases at Walmart.com
• 2% back on in-store Walmart® purchases

The Capital One Walmart Rewards® Card* also offers:

• 2% back on restaurant, travel purchases, and Murphy USA and Walmart® fuel stations
• 1% back everywhere else Mastercard is accepted

New applicants for either card can also take advantage of a welcome bonus: Earn 5% cash back on purchases in Walmart® stores for the first 12 months when you use your card with Walmart Pay.

Similar to other Capital One credit cards, rewards can be redeemed at any time and for any amount. Redemption options include travel, gift cards, the ability to cash in points during online checkout at Walmart.com and statement credits.

The Capital One Walmart Rewards card* offers the most benefits, including: extended warranty protection, travel accident insurance, 24-hour travel assistance services, price protection and more. The Walmart Rewards™ Card doesn't come with these perks.

Both Walmart cards have no annual fee, but the interest rates and other fees differ. The Capital One Walmart Rewards card* has a 18.99% or 29.99% variable APR, while the Walmart Rewards™ Card has a 26.99% variable APR.

Since the Capital One Walmart Rewards card* can be used anywhere Mastercard is accepted, cardholders have the ability to use the card abroad — and without paying a foreign transaction fee. This saves you the 3% fee many other cards charge for purchases made outside the U.S.

You can also use the card to complete a balance transfer, but the terms aren't ideal. There are currently no special financing offers, and the balance transfer fee is $0 at the Transfer APR, 3% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you.

If you're looking to finance new purchases with no interest or complete a balance transfer, consider alternative cards, such as the Citi Simplicity® Card, which offers 0% intro APR for 21 months on balance transfers from date of first transfer and 0% intro APR for 12 months on purchases from date of account opening (then 19.24% - 29.99% variable APR; see rates and fees). Balance transfers must be completed within four months of account opening. There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).

The Walmart credit cards may seem like a good choice at first glance, offering up to 5% back on Walmart purchases, but a closer look shows that the rewards are more geared to online Walmart purchases. If you prefer to shop at Walmart.com, the Walmart app or via Walmart Grocery Pickup and Delivery, then the 5% rewards rate is unmatched.

However, if you prefer to shop in Walmart stores, you can find alternative rewards cards, such as the Capital One Venture Rewards Credit Card (see rates and fees), that offer the same rewards rate at Walmart stores (2X), plus other perks such as Global Entry or TSA PreCheck statement credit.

And a basic cash-back card, such as the Citi Double Cash® Card, is a simple way to earn the same amount of rewards on all purchases. Double Cash cardholders earn 2% cash back on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. Plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24. (see rates and fees.)

If you decide that a Walmart rewards card is your best option, either the Capital One Walmart Rewards® Mastercard®* or the Walmart Rewards™ Card can help you save. The Walmart Rewards™ Card is good if you only plan to use the card on Walmart purchases, but if you want to use the card for more than just Walmart, consider the Capital One® Walmart Rewards™ Card.

Take note that there is one application for both cards, and Capital One will initially consider you for the Capital One Walmart Rewards® Mastercard®* If they are unable to approve you for that card, you will automatically be considered for the Walmart Rewards™ Card.

*Information about the Capital One Walmart Rewards® Card and Walmart Rewards™ Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the cards prior to publication.