Finances (US)

Store card vs. Credit card: Which one is better to build credit?

Do you know what card is the best to build credit? A store card or a credit card? This guide will help you determine the best way to establish good creditworthiness.

Build your credit: choosing the best store card or credit card for you

Find the best financial tool to build your credit score. Source: The Mister Finance.
Find the best financial tool to build your credit score. Source: The Mister Finance.

It is not that easy to build credit. You may rely on a credit card or a store card to do that, but it is important to know that you will not build credit overnight.

Then, you must be patient and, above all, stay in full control of your finances, especially when using credit to build credit.

A report is generated every time you use your card and pay responsibly for it. 

Continue reading to learn how the process works and to find out which card is the best tool to establish good creditworthiness.  

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What is a credit score, and how to build it?

Credit building is one of the main objectives regarding finances. Good creditworthiness helps you find better credit solutions that include low-interest rates and fees and better terms and conditions.

Usually, people with bad credit won’t be able to get great deals when it comes to credit solutions. 

Imagine you need to go after a loan to fund a renovation in your home. You will probably get good loan deals if you have a good credit score. 

On the other hand, if you have bad creditworthiness, you won’t be able to access better offers from lenders.

Thus, building your credit is one major step when establishing solid financial planning.

The credit score is the number that reflects your creditworthiness to the market. Basically, it shows your behavior as a consumer. 

To sum up, institutions rely on the score to find out how reliable you regard your finances.

And to build it, you must watch out for the bills. That is, every time you pay your bills on time, a report will be generated reflecting your good behavior as a consumer. So your score will increase. 

However, suppose you miss a payment, and you stay in debt. Then, the reports will show that institutions will know you are not maintaining your finances in good standing.

In summary, reports send an alert to credit companies about your behavior. And that reflects your credit score.

No matter which card you decide to go with, the main point is to stay in control of your bills and be responsible about your finances.

Store cards 

A store credit card serves specific purposes. Source: Canva.
A store credit card serves specific purposes. Source: Canva.

Frequently, people decide to choose a store card to build their credit.

The main reason is that it is easier to be approved for a store card instead of a credit card. In general, a store card works like a credit card.

On the contrary, it is usually not accepted everywhere, unlike credit cards, which have wider acceptance.

Store cards are mainly accepted in their store issuer or chain of stores. So, you can get access to rewards, discounts, and promotions in those institutions.

Credit cards 

On the other hand, credit cards are usually accepted everywhere. 

And they traditionally offer good rewards on all purchases along with bonuses.

Many don’t charge annual or monthly fees, although you will find the best with high fees.

Store cards vs. credit cards

Now, you must be wondering about the main differences between a store card and a credit card and which is the best to build credit.

Basically, they work pretty much similar in terms of credit building. But, they have particularities you may find useful to know before choosing.  

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1. Store cards are used in specific stores

In summary, store cards can only be used in specific stores or chains of stores. 

Although you may find store cards that are accepted everywhere depending on the flag – Visa or Mastercard – that is not the usual.  

Unfortunately, most don’t allow you to use it outside a specific store.

2. Store cards have membership fees and credit cards have annual fees

On the one hand, store cards usually have membership fees. On the other hand, credit cards usually have annual or monthly fees.

Even though you may be able to find store or credit cards without fees, they are designed for good creditworthiness consumers. 

So, if you are trying to build credit due to your less-than-perfect credit, you won’t find real cheap cards with good conditions.  

3. It is easier to get a store card instead of a credit card

Being approved for a traditional credit card demands many steps regarding eligibility requirements. 

On the contrary, it is easier to get a store card.

Many store cards don’t even require good credit scores like credit cards.

But it is important to note that store cards are usually more expensive than credit cards as well as they don’t offer as many perks as traditional cards do.

4. Store cards have higher interest rates and fees

Generally, store cards have higher interest rates and fees.

Even though you may find some with low costs, it is probably easier to get cheaper credit cards than cheap store cards.

Advantages and disadvantages of getting a store card

Having a better credit score will improve your finances. Source: Canva.
Having a better credit score will improve your finances. Source: Canva.

Store cards have pros and cons. So, before choosing one, find out the advantages and disadvantages.

Advantages

  • It offers promotions and rewards at a specific store;
  • It is easier to apply and be approved;
  • Many don’t charge an annual fee;
  • If you use it responsibly, you will be able to build your credit score.

Disadvantages

  • Most can only be used in a specific store
  • Most charge membership fees;
  • Fees and interest are usually higher than rates on credit cards.

Advantages and disadvantages of getting a credit card

Like store cards, traditional credit cards have advantages and disadvantages. Balance the pros and cons before choosing one to build your credit.

Advantages

  • Worldwide acceptance;
  • Many offer good rewards and bonuses, including travel perks;
  • They are usually cheaper than store cards.

Disadvantages

  • It is more difficult to be approved for a credit card;
  • Many charge annual or monthly fees.

Which is the best for building credit? 

So, which is the best for building credit? A store card or a credit card? 

Both have advantages and disadvantages. Although it is easier to apply for and be approved for a store card, it only can be used in a specific store, and it charges higher interest rates and fees.

On the other hand, even though credit cards have wider acceptance and better rewards, they are harder to get, and depending on your creditworthiness, they will charge high fees and rates.

So, it doesn’t really matter which one you choose.

The main lesson is: will you be able to pay the bills on time? If the answer is yes, decide to go with a store card if you regularly buy at the specific store.

Otherwise, it is better to choose a traditional credit card.

If your answer to that question is no, it is better to choose a secured card instead of a credit or store card. 

And for that reason, we present you our list of the TOP 10 secured credit cards to help you build credit. Read on and find the card that will take you to the excellent credit scores range.

man with secured credit card

TOP 10 best secured credit cards

Do you need to rebuild credit? Do you want a secured credit card with an affordable monthly payment and no annual fee? Here are the 10 best secured credit cards!

About the author  /  Aline Augusto

My name is Aline Mesquita; I'm a writer here on the blog, where I write about finance in general and other subjects. I have been working with content creation for ten years. Also, I'm post-graduated in Project Management, with expertise in SEO practices. Currently, I am studying finance, market trends, and cryptocurrencies.

Reviewed by  /  Aline Barbosa

Senior Editor

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