One of the most common questions we get when we head to almost any store: do you have a membership rewards card with us or would you like to apply for one?

Is it a good deal to get a store loyalty rewards card? How about a store credit card? How do they compare to the normal credit cards? This article is written with the intent to address those questions.

1. What are membership rewards cards?

A membership rewards card collects points redeemable for cash or discount certificates. You pay with your own credit card, check, or cash but you are required to provide them with the membership rewards card number at purchase. These originate from grocery stores that give you discounts where in return, they track your spending patterns. They have spread to almost all stores now: BestBuy, Staples, Office Depot, VanHeusen, and many more. They collect your data for marketing and supply management purposes. We recommend signing up with them if you shop there more than twice a year.

2. What about store cards?

A store card is basically the mixture of a membership rewards card with a credit card. Stores can track your purchases as well as pay a lower fee for your credit spendings. In return, the store will give you special treats such as "10% off your first day purchases or $15 off!" Getting a store card is more involved than your membership rewards. They will pull your credit report, just like getting a credit card, as well as all your person identification information such as your employment, income, social security number, etc. A typical trait on store cards is that they are only good for purchases within that store, such as Macy's, Fry's Electronics, Dell Computer, Norstrom's, and similar.

Tip: Failure to pay your department store cards will result in the same credit hit as failure to pay your credit cards. In other words, pay them on time!

3. Credit vs. Store cards - A Simple Criteria!

After tons of mathematical equations, complicated calculations, and heated debates, here is the simplest criteria we come up with:

The logic is simple: there are credit card promotions that will give you $100 in perks for getting their cards. You are subject to the same credit scrutiny for applying to either the credit card or the store card, so they cancel each other out. The purchase cashbacks are nearly identical for both cards. Other factors such as APR, grace period, minimum payments, etc. are very similar for both cases as well.

So the next time that you are doing the big purchases for sofa, big screen television sets, refridgerator, and the like, it might worth it to get their card!

Happy holidays and enjoy your shoppings!

Tip: Anything under $100 is certainly not worth your time. As noted, the store cards are usually only good for purchases at that specific store brand. Our survey on store card experiences also indicate that the billing and payment features to the store cards are usually through a 3rd party and not as establish as a normal credit card.
 

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