store credit cardsWhile this information was accurate at the time this post was published, these cards’ offers and perks may have expired or changed over time. Visit our reviews of the best credit cards to find the right card for your needs.

Store credit cards offer many benefits to consumers, and they are especially enticing during the holiday season when they offer new cardholders extra savings and discounts for signing up. Not only are these types of cards appealing for their immediate savings, but they’re also really convenient to open since you’re already at the store or the store’s website. But, not everything is always as good as it sounds, especially when compared to other major credit cards. That’s why we’ve put together this guide on store credit cards to explain four aspects of the cards that you should know so you can decide if signing up for one is actually a good idea or not.

Some store credit cards can’t be used everywhere

Although these types of credit cards do report to the credit bureaus like other major credit cards do, which can help boost your credit scores if you are making on-time payments and using them responsibly, a number of store credit cards aren’t as widely accepted as major credit cards. For example, if you sign up for a card with X store that isn’t branded with a Visa, MasterCard, American Express or Discover logo, you cannot use the card outside of that store (or the store’s website). That said, some store credit cards might allow you to use the card at sister stores, but you’re usually limited to using the card at the store (or brand) that issued it (e.g., a Target credit card can only be used at Target stores). And if you aren’t able to use it everywhere, it’s easy to not only forget to have the card, especially if you only signed up for it in order to receive discounts on your holiday shopping, but also hard to rack up rewards since you can only use it in one store. When you do decide to use the card, you may forget about when the bill is due since it’s not a card you use all the time, which could reflect poorly on your credit reports and scores if you accidentally miss the payment. Similarly, since it’s not a card you use frequently, you may not make it a habit to check the credit card statement for fraudulent transactions, a tell-tale sign your card information was somehow breached or you’ve fallen victim to identity theft.

Store credit cards offer limited rewards

Because you can only use some store credit cards at specific stores, as we noted above, you are only able to earn rewards (or discounts) from this one retailer, as opposed to a general rewards credit card that earns you rewards on all types of purchases, no matter where you swipe your card. If you’re looking for a card that offers more versatility in terms of earning rewards, meaning you can earn top-notch rewards but use the card anywhere, there are some better options. For example, the Blue Cash Everyday Card from American Express gives you 3% cash back at U.S. supermarkets (up to $6,000/year on purchases, then it’s 1% back), 2% cash back at U.S. gas stations and select department stores as well as 1% cash back on all other purchases. And since this is an American Express-branded card, you’ll be able to use it at a number of grocery stores and department stores — not just one retailer. While we used the Blue Cash Everyday Card from American Express as an example, it’s not the only card that offers such rewards. Check out our list of the best cash back credit cards for holiday shopping to see which cards earn the most bang for your buck at your favorite retail and online stores.

Store credit cards might have lower credit limits

Because the majority of store credit cards can only be used at one retailer, they often provide lower credit limits than you’d receive with a traditional credit card. The good thing about having a lower credit limit is that it can help prevent overspending, however, it can also raise your credit utilization ratio, or your balance-to-limit ratio, when you make purchases with the card. This ratio compares your total credit used to your total credit limit and is displayed as a percentage. For example, if you open a store credit card (and this is your only credit card) that gives you a spending limit of $500 and you charge $350, your credit utilization ratio would be 70% ($350 divided by $500). Creditors and lenders, who use your credit utilization ratio to help them determine how much of a risk you are, generally like to see this rate around or under 30%, as they believe it’s a reflection of responsible card management. This means that if you have a credit utilization ratio of 70%, like our example, a creditor or lender will likely view you as a risk, which is a big deal because it could affect your ability to open new lines of credit in the near future and result in denied credit card applications.

You may pay more in interest

While the appeal of getting an extra 20% off already marked down items is enticing, you should definitely take a look at a store credit card’s terms and condition to see what its APR and other fees are before applying. While store credit cards are usually available to a number of consumers, including those with less-than-perfect credit, this also means that they may not offer favorable APRs or have a number of hidden fees to accommodate all credit scores. Because the issuers of store credit cards are taking a risk by broadening the application standards, they charge high interest to ensure they’re getting their money’s worth and make up for that risk. High interest rates are dangerous because they make it even harder for you to pay off any balance you carry on the card and easier for you to fall into debt. General credit cards, on the other hand, usually offer variable interest rates that are usually much lower than store credit cards, as you are assigned an APR based on your creditworthiness, while store credit cards offer the same rate to everyone. On top of that, many general credit cards also offer long-term 0% intro APR on purchases and balance transfers, giving you more time to pay down and pay off any balances you’ve accumulated, including ones from your holiday purchases.

Looking for a non-store credit card to use for your holiday shopping this season? We’ve rounded up some of the best cash back rewards credit cards for holiday shopping. And if you’re looking for a credit card to use year-round, head over to our rewards credit card reviews to find one that best fits your credit type and spending habits.