Credit cards can have serious consequences on your credit and financial health.
The two most common types of store cards are open-loop and closed-loop cards, also known as on-grid and off-grid cards. Open-loop cards, sometimes called in-network or co-branded, usually bear a Visa, Mastercard, American Express, or other major card issuer logo and can be used anywhere the issuer’s cards are accepted. An off-grid card, also known as a closed-loop or store-only card, can only be used in the store associated with it.
Our list includes both networked and closed-loop cards and it is important to know which type of card you are applying for. It may happen that you ask for an open-loop map, but you are offered a closed-loop map instead. This can happen because the bank doesn’t think your credit qualifies for an open loop card, but they think you qualify for credit.
Closed-loop cards normally impact credit and appear on credit reports the same as network cards. Many store cards behave the same as a credit card, but not all do. Some cards offer “special financing” which implies the fine print applicants should pay special attention to, as it often involves different terms than a standard credit card. No matter what the store card you want says about its interest, fees, and other charges, be sure to read all the fine print until you fully understand what you’re getting yourself into.
To make the process easier, Forbes Advisor has created a number of guides to help consumers define terms, explore the inner workings of credit, and understand how banks and other lenders advertise financial products:
Store cards have long had a reputation for scamming consumers with high interest rates and hidden fees, but store cards can also offer a way to unlock special financing on large purchases or earn rewards. or discounts at a favorite store. Choose carefully, especially if you’re just starting to build credit, because you’ll want to keep your first credit card account open for as long as possible for the benefit that account longevity will have on your score.
If you’re not convinced that a store card is the best option (and you probably shouldn’t be, since store cards often have much higher rates and less favorable terms), consider a secured card or student card, which can help rebuild credit. without the high rates and hidden fees that many store cards are infamous for.