Survey: Retail Credit Cards Carry Balance Risks [2023 Holiday Shopping]

The FinanceBuzz team surveyed shoppers to find out how many people sign up for branded retail credit cards, why they sign up, how those cards impact their shopping, and more.

A credit card is held up to a handheld credit card reader. This appears to be at a store checkout.
Updated May 13, 2024
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Retail or store credit cards are a way for retailers to encourage shoppers to spend more money at their stores in exchange for savings and rewards. These cards typically come with higher-than-average interest rates and limitations on rewards earning and redemption. 

So are Americans still signing up for these credit cards, and are they satisfied with their cardholder experience?

To find out more about retail card behavior, our team at FinanceBuzz surveyed 1,000 U.S. adults to see how many people carry a retailer-specific credit card and how they spend their money.

In this article

Key findings

  • Almost half (45%) of U.S. consumers have signed up for a store-specific credit card.
  • Store cards increase loyalty: More than half of cardholders report increased spending at the specific retailer after signing up for a store card.
  • On average, consumers say they’d have to be offered $115 in savings in order to sign up for a retail card.
  • The most common reason for signing up for a store credit card is to save money on a big purchase.
  • 1 in 5 cardholders say they’re more likely to carry a balance on retail cards vs. other credit cards.
  • 27% of people who’ve signed up for a store credit card say they regret it.

A pie chart showing percentages of people who say they have or have not signed up for a retail store credit card.

What drives retailer-specific credit card sign-ups?

Nearly half of the population (45% of people) say they have signed up for at least one store-specific retail credit card at some point in their life. Knowing how widespread these kinds of cards are, our team wanted to know which factors and considerations most often motivate shoppers to apply for them.

A bar chart showing percentages of people who say they signed up for a retail credit card for various reasons.

Cost savings at the register is the top motivator people gave for signing up for a retail credit card, with 55% of people citing savings as a major reason behind their decision to apply.

Similar to at-the-register savings, 38% of people said a sign-up bonus was a motivator to open a credit card. An equal number (38%) of respondents said they opened a retail credit card due to retailer loyalty. If you shop at a store often enough, even small savings on each trip can add up.

The last major reason that people sign up for retail credit cards is a need to finance a large purchase. One out of every four retail card users cited this as a motivator.

On average, U.S. adults say they would need to save $115 on a single purchase to justify signing up for a store-specific credit card.

How retail cards impact spending behavior

The number of people who have signed up for store cards tells only part of the story. How do these cards impact shopping behavior? And how do users feel about the experience of using them?

A pie chart showing percentages of people who say signing up for a retail credit card did or did not lead them to spend more money at the store in question.

A significant portion of shoppers see their store-specific credit card as a reason to shop at that store more often. More than half of consumers with a retail credit card (54%) say they shop at that store more than they did before becoming a cardholder.

Thankfully for those making increased trips to their favorite stores, the majority of retail credit card users feel they have gotten their money’s worth. In fact, nearly two-thirds of people with store-specific credit cards (64%) say the rewards and discounts offered by their card(s) were worth opening such a limited line of credit.

A pie chart showing percentage of people who say they do or do not regret signing up for a retail credit card.

But that doesn’t mean everyone loves using a retail credit card. In fact, more than a quarter of people who have used these kinds of cards (27%) say they regret signing up for at least one of them in the past.

Negative retail card experiences

While our survey revealed that most shoppers are happy with their retail store card’s rewards, these cards have some downsides — namely, high annual percentage rates (APRs).

If a card has a high APR, it can be hard to pay off your full balance quickly. And store cards frequently have higher APRs than traditional credit cards.

A bar chart showing percentages of people who report having experienced various negative experiences associated with retail credit cards.

One-fifth of retail card users report that they were more likely to carry a balance on their store-specific card(s) than they were on their regular credit cards. Additionally, 12% of people said they used their store credit card(s) so infrequently that they would occasionally forget to pay off their balance, which causes a double whammy of late fees on top of high interest rates.

Insights from our experts

Brandan Wheeler, Ph.D.

Assistant Professor — Department of Family and Consumer Sciences

Alabama A&M University

Does signing up for retail credit cards at the register ever benefit consumers?

Store credit cards will often provide a reward when signing up, such as a 10% discount on the first purchase. Store credit cards may also provide additional perks, such as loyalty or cashback rewards, or additional discounts on future purchases. Additionally, store credit cards provide convenience when shopping at a [consumer’s] favorite store. Finally, store credit cards can sometimes be easier to get than a regular credit card, which may potentially benefit someone with a lower credit score or someone trying to build credit.

What are some red flags to look out for when considering applying for a retailer-specific credit card?

Store credit cards will often charge a higher interest rate than regular credit cards. These store credit cards will also often have a lower credit limit. A person will want to pay attention to these factors before signing up for a store credit card. However, if someone is trying to establish credit, they will likely have to pay a higher interest rate regardless of what card is sought. Additionally, if someone pays off their balance every month, interest rates will not matter as much.

Be sure to verify before applying for any store credit card that you’re considering what the interest rates and credit limits will be, and what potential fees may be associated with the card.

Remember, too, that applying for a new credit card will likely lower a person’s credit score, at least initially, so be strategic about when you apply, and avoid applying for multiple credit cards in a short period of time.

Is there a higher risk of carrying an unmanageable balance on a retailer-specific credit card than on other cards? Why or why not?

Having a lower credit limit on store credit cards can both help and hinder someone. This lower credit limit will hopefully prevent someone from taking on too much debt on the store credit card.

However, shopping at one’s favorite store may prompt a person to purchase more than they intended to, especially if they shop there frequently, which may quickly max out a lower credit limit. Credit utilization ratios are used to calculate a person’s credit score. If this credit utilization rate is high (such as maxing out a $500 credit limit, meaning a 100% utilization ratio), this person’s credit score will drop. People are not recommended to charge more than 10% to 30% toward their credit limit (keeping the credit utilization ratio between 10 and 30%), so a person will want to be careful about how much they charge and how much of a balance they carry. Ideally, a person will pay off the balance each month, thus bringing their credit utilization ratio back down to 0% each month.

In addition to credit utilization, be aware of how much interest will be charged if a person carries a balance from month to month, especially if they pay only the minimum monthly payments. Even on lower amounts, this interest can add up very quickly and will take time to repay if making minimum payments, especially if someone is paying higher interest rates for this store credit card. Paying interest will negate many of the benefits of receiving discounts on individual purchases.

Richard M. Alderman, J.D.

Professor of Law, Emeritus — Law Center

University of Houston

Does signing up for retail credit cards at the register ever benefit consumers?

Simple answer, “it depends.” As a rule, you should not sign up for a credit card at the register. First, if you are at the register, then you probably have the ability to pay, either in cash or with another credit card, and you should not get another card on a whim. Second, even if you think the new credit card might be a good idea, you probably do not have time to review the terms of the merchant’s card to determine if it is something you should obtain.

For example, many store cards are not a good deal. They often have high interest rates, low credit limits, and can be used only with limited businesses. On the other hand, some stores offer good discounts if you apply, and have loyalty programs that can be beneficial. Before signing up for a new card, you should take your time and weigh the pros and cons considering your shopping and financial situation.

What are some “green flags” to look out for when considering applying for a retailer-specific credit card?

The “green flags” are the same as any other credit card. Look for things that will make the card one you can use beneficially and that will not suddenly surprise you with high fees or interest. Remember, this card will help you improve your credit score, if you don’t get in over your head and get behind on payments.

For example, start by looking at the interest rate and the credit limit. If you don’t pay your bill in full each month, a high interest rate can really add up. Also, a low credit limit means you may not be able to purchase what you want, and if you inadvertently go over [the limit], there is usually a high fee. And speaking of fees, be sure to check out all the fees that may be charged and in what circumstances. Do you ever pay late? How much is the late fee? Late fees can be very expensive. Also, check out the annual fee if there is one. You can probably get a regular credit card with no annual fees. Finally, on the plus side, many retailer credit cards have reward points or cash back that can be generous. If this is a business you shop with a lot, that can be a big benefit.

Is there a higher risk of carrying an unmanageable balance on a retailer-specific credit card than on other cards? Why or why not?

I do not believe that the risk of creating an unmanageable balance on a retailer-specific credit card is greater than any other card, if you shop around and compare terms and conditions. You may create an unmanageable balance with any card by not knowing the fees and interest rate, not being careful about how much you spend, and maintaining a high balance. With any card, the way to avoid an unmanageable balance is to be responsible, make timely payments, be aware of your credit limit, and don’t charge [a purchase] when you are not sure you will be able to make the payments.

Answers have been edited slightly for brevity and clarity.

Bottom line

A credit card can be a great tool to have in your wallet if you do a bit of research on available offers and how to use a card wisely. Here are some helpful credit card tips to follow:

  • Build credit with a credit card. Retail cards are many shoppers' first introduction to having a credit card. If you have a relatively new credit profile and are in the market for a beginner card, look into some of the best credit cards for no credit.
  • Save on interest. Retail cards often have high APRs, which can make it difficult to keep up with payments. A 0% APR credit card can help you save on interest charges and maintain an on-time payment history if you use it for a big purchase.
  • Start healthy card habits with daily use. Retail card or otherwise, a credit card for your daily essentials can be a great way to develop smart credit card habits. The Chase Freedom Unlimited®, for example, is one of the best credit cards for daily use.
  • Compare cardholder rewards. If you’re already a cardholder with popular creditors like American Express or Chase, compare Amex points to Chase points to find the best rewards system for your needs.


FinanceBuzz surveyed 1,000 U.S. adults in May, 2023. Only respondents who indicated that they have successfully applied for at least one retail credit card before were asked questions related to signing up for and using these kinds of cards.

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Josh Koebert

Josh Koebert is an experienced content marketer that loves exploring how personal finance overlaps with topics such as sports, food, pop culture, and more. His work has been featured on sites such as CNN, ESPN, Business Insider, and Lifehacker.