44% of Americans might have the wrong type of credit card

Not surprisingly, Visa is the most popular type of credit card. In our study of credit card market share, just over 49% of American adults had Visa credit cards.

However, the second place was much more interesting. It belonged to store credit cards, since just over 44% of Americans had this type of card. This figure was higher than the number of Americans carrying Mastercard, Discover or American Express cards.

While store cards have their uses, they also have some notable flaws. If you have a store credit card, you could probably benefit from a change in card type.

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The popularity of store credit cards is mainly due to good marketing. Retailers push their cards at every opportunity. While you are checking out online, you will see a link to get the store map. And at the store itself, the cashier will ask you if you want to apply. So when you shop there anyway and see an offer to save money with an in-store credit card, signing up seems like a no-brainer.

To make the offer more attractive, store cards often include special introductory offers. Discounts of 10% or more on your purchase are common, as are introductory 0% APR finance offers. These offers usually don’t come close to what you can get with other credit card signup bonuses, but many buyers don’t realize it.

Store credit cards also tend to be easy to obtain. Most are available to consumers with fair and sometimes bad credit. So, not only do stores get many credit card applicants because of their marketing, but they also approve quite a few.

The disadvantages of in-store credit cards

The biggest problem with store credit cards is their limitation. A standard store card only works in this store (there are exceptions, as some stores offer cards connected to payment networks, most often Visa or Mastercard).

Most store credit cards require you to redeem your points at the store itself. It works well when you have something you want to buy there, but when you don’t, you don’t save money.

Other types of rewards credit cards don’t have this problem. A reimbursement card allows you to collect money, and a travel card can allow you to travel for free. You can still save money with these cards.

High APRs are also common with store cards. It’s okay if you pay your bill in full each month. But if you ever carry a balance, the interest charges could be costly.

Choosing the right credit cards for your wallet

You can probably find better deals on all the perks that a credit card offers in the store. Here are the most common reasons to open a store credit card and smarter alternatives:

A store credit card isn’t always a bad choice. This can be a good idea if you are building up some credit and can’t yet qualify for the best credit cards. Or, if you shop at the store often, it might be worth opening your credit card. But a store card shouldn’t be the only credit card you have. There are many other options that will allow you to optimize your daily shopping.

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