Is a Store Credit Card Right for Your Wallet?

The offer may sound tempting, but many times shoppers are better off without one.

The offer may sound tempting, but many times shoppers are better off without one
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Moreover, co-branded cards prove beneficial for some consumers for other reasons. Janna Herron, credit card analyst at Bankrate.com, points to the TrueEarnings Card from Costco and American Express as a card that offers an attractive rewards plan, including 3 percent cash back on gas up to $4,000 per year in purchases (1 percent thereafter) and 2 percent cash back at restaurants in the United States.

However, Ulzheimer says consumers with good credit (a Fico score in the mid-700s or above) can typically qualify for a better rewards credit card. "Even using a general use rewards credit card is almost always going to be a better move than using a retail store credit card," he says. "The limits are higher, thus avoiding the issue of over-leveraging the retail card, and the rates will likely be considerably lower, thus making the debt less expensive to carry." But shoppers who have too many rewards credit cards may run into trouble.

[See: 10 Signs You Shop Too Much.]

"You should have a good grasp of what the rewards are for each card in your wallet or your purse," says credit expert Bill Hardekopf, CEO of LowCards.com. "It's your responsibility to know that. If you don't, you're not making the best use of your money." When you make a purchase you can use a mobile app like Glyph (for iPhones), which tells you what credit card to use to earn the best rewards.

Take advantage of free rewards. Whether or not you opt for a store credit card, you can maximize your savings by using a retailer's rewards card. Many major retailers offer one for free like Best Buy, which rewards frequent shoppers with loyalty points that can add up to significant store credit.