“The store is looking to build loyalty,” Rossman says. “They often offer better rewards at purchases with their own stores [than at other retailers].”
But these rewards can distract you from the fact that, overall, the card may just not be that good.
Beyond high interest rate considerations, Rossman says that consumers should factor in the opportunity cost of signing up for a retail card over an all-purpose card from an issuer like American Express or Visa. An all-purpose card may not give the same reward in the moment, but could offer better benefits overall.
“The best bank-issued cards typically require you to spend a few hundred or few thousand dollars in the first few months to get their sign-up bonus,” he says. “Even if a store offers you rewards, is the long-term benefit of the card as good as putting that exact same purchase on a general purpose card?”