6 questions to ask before signing up for a store credit card

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Just as you can count on Christmas arriving on Dec. 25 every year, you can be sure that stores will ask you to sign up for a store credit card over the holidays.

In a rush to pay for your purchases, you may not be paying much attention to the details of these offers. But you should: Applying for store credit card is an important financial decision, just like applying for any credit card.

So how can you size up these cards and apply for the best one? Here are six questions to ask when evaluating a store credit card.

1. What’s the initial offer? 

Part of the success of store credit cards is due to the initial sign-up bonuses offered to new applicants, which is typically a discount on same-day purchases.

You should evaluate the size of the discount relative to the purchases it will apply to. Then compare the money you’d save to the sign-up bonuses typically offered by other credit cards.

For example, a 10% discount on a $100 purchase would only amount to $10, which is far less than competing cards’ offers. Yet if you were able to receive a 20% discount on a $1,000 purchase, it would be worth $200, which is a competitive bonus compared to other cash-back rewards cards.

2. What are the rewards for future purchases? 

In addition to a generous sign-up bonus, the best store credit cards offer valuable rewards that can be put toward future purchases. Furthermore, the rewards offered should be in excess of what you could otherwise receive from a credit card with a bank rewards program.

The best store credit cards will offer rewards for in-store purchases that are worth 3% to 5% of the amount spent. This is better than the 2% cash back offered by some of the best cash-back credit cards.

3. What benefits are being offered? 

Although some store credit cards can compete with other cards’ reward programs, many fall short. But where store credit cards really shine is when it comes to benefits. The best store cards shower customers with exclusives such as coupons, access to special events and savings on shipping.

For example, the Target RedCard offers free shipping on online purchases and an extra 30 days for returns. The L.L. Bean credit card offers free returns on online orders and free monograms on L.L. Bean products.