Looking for a way to build credit but keep getting turned down when you apply for a credit card? Credit cards are a great way to build credit. If you have bad credit, obtaining new lines of credit can demonstrate that you can now make your monthly payments on time.
But saying go out and apply for a credit card and build credit is easier said than done for some people. Especially if they don’t have the money to put down a security deposit and get approved for a guaranteed approval secured credit card.
For people with bad or no credit, store credit cards offer an easier route to building credit and spending power.
Online store credit cards with guaranteed approval are tools used by many consumers to build credit. Many retailers realize these cards can be used to help their clients not only shop in their stores. But help their clients to build or rebuild their credit by reporting their monthly payments to the major credit reporting agencies (Experian, Equifax, and TransUnion) monthly.
What are online store credit cards
These are credit cards that are issued by a store that can be used to buy merchandise from their catalog.
You CAN NOT use these cards anywhere else EXCEPT for the store that issues it.
Types of Online Store Credit Cards
Private-label cards. These instant approval store credit cards offer guaranteed approval to their customers. These retailers have an online catalog that they issue a line of credit for so their clients can make purchases.
Many of them don’t pull credit or have a minimum credit score requirement. Making them ideal for people with bad credit.
Co-branded store credit cards are cards that are issued by brick and mortar stores like Macy’s. They are credit score driven. The better your credit, the larger your line of credit. You can buy things from their website or go to their location and buy items.
The Pros and Cons of Online Store Credit Cards
Below are some of the pros and cons of online store credit cards with guaranteed approval.
Unsecured Line of credit These sort of cards DO NOT require a security deposit.
No Credit Checks If the catalog card you are looking at offers guaranteed approval or instant approval. That usually means they will not require a credit check.
Read the terms and conditions before you apply
Credit-building benefits. These credit cards have an easy approval process. Many do not pull a credit report. Since they guarantee approval to EVERYBODY. Consumers with credit problems have used them to help improve their credit scores.
Tip: If you are applying for one of these cards with the goal of rebuilding your credit. Make sure the one you choose reports to at least 1 credit bureau.
Purchasing Power. These credit cards give cardholders the ability to buy items when they want. They can then pay for them monthly instead of having to have all the funds upfront.
Higher credit limits – These stores traditionally give you a larger credit limit than traditional credit cards. This is a big help to people with credit problems since most banks will only approve them for lines of credit of $200-$500.
In contrast, the issuers of these online store credit cards will usually START their credit limits at $750 and up.
Interest rates. While many of these online store credit cards DO NOT charge an interest rate. There are some that do. Some may even charge a monthly fee to report your payment history to the credit bureaus.
You need to read the terms and conditions carefully so you know what to expect.
Too much access to credit – For some consumers, this is their first credit card. They are not used to handling credit, let alone large lines of credit and can easily become overextended.
Less versatility. The can only be used in the issuers store. Unlike a traditional credit card that can be used anywhere, Visa, Mastercard, or American Express is taken.
In conclusion, store credit cards are an excellent way to build up your credit. Online store credit cards with guaranteed approval are like every other credit card, they have advantages and disadvantages. But if you want an UNSECURED card with a higher limit then what the bad credit credit card issuers offer, then store credit cards are a good alternative.