The Value in Store Credit Cards

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A few weeks ago another blogger (Ben at One Mile at a Time) wrote a post putting down store credit cards, specifically the Macy’s American Express card. You can read more about it here, but I thoroughly disagree. I actually think there can be a ton of value in applying for and using a store branded credit card. Store co-branded credit cards typically offer three things: 1) Discount on your purchase when opening the card; 2) A percentage back to your card when shopping at that specific store; 3) Special coupons for being a cardholder. Now, you won’t earn 100,000 points just by signing up or anything like that, but if you can afford to open another credit card you can find a lot of value vs. using a points/miles earning loyalty credit card.

Store co-branded card examples:

  • Macy’s and Bloomingdales:
    • Sign up bonus: Typically you’ll earn 15%-20% off your purchase when signing up for the card. Usually this savings pass lasts 48 hours after applying and the discount comes off your statement so it can be combined with other coupons. Let’s say you are purchasing $500 worth of items,  you are saving $100 right off the bat (assuming a 20% discount, also note that you are capped at saving $100 at Macy’s and $250 at Bloomingdales)! If you were using a points/miles earning credit card most likely you’d earn 500 points valued at about $10.
    • Coupons: Card members are constantly receiving coupons in the mail that can only be used when using your Macy’s card. These coupons have definitely saved me money over the years. Some are $10 off a $25 purchase which is a great deal!
    • Benefits: These are both American Express credit card so you can register them for the many Amex Sync promotions!! I’ve personally received hundreds of dollars back in statement credits (per card!) due to this.
  • Pottery Barn/Pottery Barn Kids:
    • Sign up bonus: None
    • % Back when shopping: You receive 10% back on all purchases at Pottery Barn and Pottery Barn Kids when using their card. For every $250 cumulative spend you receive you’ll earn a $25 reward certificate to use on a future purchase within 180 days. When using a points or miles earning credit card, no card will get you 10% back in value. The only way to get close to value is if you use a Chase Ink Bold/Plus and purchase Pottery Barn gift cards at Staples and earn 5x points on your purchase. If you value your points at 2 cents per dollar this will equal the same amount. However, I’d prefer the cash now vs. earning points to use at a future time where programs are constantly devaluing.
  • Crate and Barrel:
    • Sign up bonus: Typically you can receive a 15% discount on your purchase when signing up for their credit card. This means if you were looking to purchase an entire living room set for $5,000, for example, you can get $750 off right away. While yes, a $5,000 purchase might help you meet the minimum spend requirements on another card, there are many ways to meets it and saving $750 is well worth it!
    • % Back when shopping: Similar to Pottery Barn, you receive 10% back on all purchases at Crate and Barrel when using this credit card. For every $200 cumulative spend, you’ll earn a $20 certificate to use on a future purchase.
  • The Gap:
    • Sign up bonus: They typically run a 20% discount promotion for opening up a credit card in-store. This probably won’t be a huge savings, but the long term savings can be significant.
    • % Back when shopping: You’ll get a $10 reward card for every $200 you spend at the store when using their credit card.
    • Benefits: Free online shipping, an additional 10% off on Tuesdays, during Friends and Family sales card members get more savings, random coupons in the mail, etc.

Of course there are MANY more store co-branded credit cards, but I wanted to list out just a few examples where they can save you more money now vs. a points and miles credit card. And most store credit cards have no annual fee so you never need to worry about canceling them.

Keep in mind though I do NOT recommend store credit cards for everyday spend. For those purchases they almost never provide a good value. Also, paying your bill I find more cumbersome then regular credit cards so many sure to always pay off your bill on time. You do not want to apply for a card to save $100 and then months later find out that it was never paid and negatively impacted your credit report.

I personally have the Macy’s and Bloomingdales credit card and am a HUGE fan of them simply due to the fact that they are American Express cards and I have them synced up to different Twitter accounts to take advantage of the numerous Amex Sync deals. By having these two cards I’ve received about $500 back in statement credits combined. That is a great deal for a no annual fee card! I also receive a bunch of coupons in the mail that have saved me lots of money when purchasing wedding gifts for others!

What are your thoughts on store co-branded credit cards?

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  1. Here in Canada, we don’t have the same huge bonuses as you as far as sign up goes.
    Probably the most well known is the Canadian Tire Mastercard or the PC Financial Mastercard.
    The PC one for instance offers $20 in free groceries to sign up and a better earn rate when shopping there like the Canadian Tire card.
    The 3 of us at our website would rather collect Amex MR points where there is a huge sign-up bonus which can be used towards travel. If we aren’t paying the high interest charges that Amex charges, the sign up bonus of $250 towards travel or optional conversion to points, is significantly better than $20 in groceries.
    But again, Amex isn’t for everyone.

  2. The other benefit is that some stores will give you 0% interest in paying off large bills over a period of time. I just bought new windows and doors from Home Depot and opened a Home Depot credit card in order to take advantage of 0% interest for 24 months. Rather than having to front $6800 in a single payment, I’m able to just pay the minimum of $69/month now while saving up for the remainder of the payment after month 23.

  3. There are more benefits to Pottery Barn. Four times a year I receive a coupon in the mail for $25 off a $50 purchase. At least once a year (typically right before Christmas if I remember right), they have been offering double rewards. That means you get a $25 reward certificate for only spending $125. Go thorough Ultimate Rewards to PB, then purchase using your PBcc (purchase a gift card if you want). They used to be on Upromise, but when I checked just now, I didn’t see them listed.
    Just to keep it interesting, they solicit donations for St. Jude’s. In the past, this has coincided with double reward points time. If you are going to make a donation anyway, make it then. Your receipt will show “St. Jude donation” so you can get your tax receipt as well.
    Whatever you do, don’t carry a balance with them–I remember getting an update in terms recently, and their interest rate was CRAZY high!

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