Not all credit cards are created equal. The primary distinction is the issuer, which could be either a bank or a company. Ironically, the concept of credit cards originated with the retail industry, and it was later adopted by banks, which opened theirs up to use across a wide spectrum of stores and services.

Today’s retailers often use a clever marketing tactic of offering an on-the-spot discount when you apply for one of their credit cards at the point of purchase. It may seem like a can’t-lose deal, but store credit cards and bank credit cards have a number of differences below the surface that you should consider first.


Difference Between A Bank Credit Card And A Store Credit Card

Convenience of Use

Bank credit cards can be used nearly everywhere, from airlines and hotels to gas stations and fast-food restaurants, while store credit cards are limited to the establishment that issued them and all their locations.


Interest Rates

The annual percentage rate (APR) charged by bank credit cards is almost always lower than the APR charged by store credit cards, and you can sometimes get an additional break by maintaining a good payment history. Store credit cards often charge the maximum APR allowed from day one, regardless of whether or not you pay on time.


Loyalty Programs

Competition among bank credit cards has resulted in lenders incorporating various loyalty programs to reward frequent users. Some of the different types include:

  • Cash back programs, where you earn back a certain percentage of your purchases. It could apply to any use of the card, purchases in a specific category (such as clothing or gasoline), or purchases from a list of qualified vendors.
  • Points programs, in which you accumulate points for each dollar of your purchases to be applied toward a “reward.” The most popular rewards tend to be travel-related, such as airline tickets or hotel stays.

On the other hand, store credit cards may entitle you to perks such as coupons or early access to sales, but they rarely include the more robust loyalty programs.


Approval Qualifications

This is one area where store credit cards have a bit of an advantage. You can generally be approved for a store credit card with a much lower credit score than you need to receive a bank credit card. If you are trying to establish or improve your credit history, a store credit card may help.

In today’s financial landscape, credit cards are more of a necessity than a luxury. Evaluate your options, choose carefully and use smartly to maintain a strong financial profile.


Daniel R. Gamez, an attorney focusing exclusively in debt relief, is licensed to practice in all state and federal courts in California and Texas. Mr. Gamez owns and operates the Gamez Law Firm in San Diego, CA. For more information, please contact Daniel Gamez at 858-217-5051, or use our online contact form. Stay updated with the latest debt relief tips by following on Facebook and Twitter!