Which Retail Credit Cards Are the Best?

There's a benefit to all of those credit cards out there, although it may not seem like it when you're faced with having to choose which one to pick for your daily use. The competition between these cards has made their reward systems more enticing to consumers, but something that may be overlooked is the cards offered by individual retail stores themselves. So often we get distracted by the major credit card companies that we forget that our favorite stores might be able to reward our shopping habits even more.

Closed-Loop Versus Open-Loop Cards

Before diving in too deep into the details of retail credit cards, you need to know the difference between a closed-loop card and an open-loop card. If a store's card is closed-loop, that means you can only use the credit card at their store (or at certain stores within that company's ownership). If you want a credit card you can use anywhere, look for a store that offers an open-loop card. It will have a Visa or Mastercard label on the front.

Amazon Prime Rewards Visa Signature Card

The sheer ubiquity and demand of Amazon has perhaps placed its retail credit card as the leading option among its competitors. Considering how much we all use Amazon, the perks that come with its unlimited cash back card are simply too good to resist. It doesn't have an annual fee (but you're probably paying an annual fee with Amazon Prime), and you can use it anywhere, not just on Amazon.

The perks:

• 5% back on all Amazon.com purchases (includes Whole Foods purchases)
• 2% back at restaurants, for gas, and drugstores
• 1% back on everything else
• 10% back or more on select products at Amazon for Prime Day

Capital One Walmart Rewards Mastercard

Walmart is everywhere, and chances are, you shop there (for some of us, it's the only grocery store within miles). Get rewarded for your shopping with the Capital One Walmart Rewards Mastercard. Because the card is a Mastercard, you'll be able to use it outside of Walmart and still earn rewards. On top of that, there's no annual fee.

With the Walmart Rewards card, here's what you'll get:

• 5% back when you shop at Walmart.com or use the Walmart app to make purchases
• 5% back for the first year of membership for in-store purchases made when you use Walmart Pay (after your first year, it becomes 2% back)
• 2% back on travel and restaurants
• 1% back on everything else

Target REDcard Credit Card

Who doesn't love a shopping trip to Target? If you find your retail therapy at Target, consider signing up for their Target REDcard because the rewards make your trips even more rewarding. There's no annual fee, but keep in mind that this is a closed-loop card, so you'll only be able to use it at a Target store or Target.com. They do offer an open-loop Mastercard version if you'd like to use it elsewhere.

The Target REDcard offers:

• 5% off qualifying Target buys
• 10% discount every year on your card's anniversary
• An extra 30 days for returns
• Free shipping on the majority of purchases made at Target.com

Macy's Credit Card

Macy's Credit Card is an excellent choice because of its numerous departments. The store has everything from furniture to clothes, home goods, and kitchenware. Earn rewards for having to make large purchases with this card. There's no annual fee.

The benefits:

• 5% back and free shipping for Platinum Members in Macy's Star Rewards program (spend $1,200 with your card annually)
• New cardholders get 20% off all Macy's purchases within the first two days of opening their account

Gap Visa Credit Card

The best part about the Gap Visa Credit Card is that it's linked to all of Gap's other brands. Gap is the "parent" of several other companies, so you'll be rewarded for shopping at each of them: Old Navy, Banana Republic, Athleta, and Gap Factory. Similarly, these stores offer their own retail cards with similar benefits. There are no annual fees, and it's an open-loop card, so feel free to rack up your points anywhere you go.

Gap Visa Credit Card has several advantages for cardholders:

• 5 points for every $1 spent at all of the Gap brands, either in-store on online
• 1 point for every dollar spent everywhere else
• Points can be redeemed for credit at any Gap or Gap brand store
• Save 20% on your first purchase (and get free shipping)
• Get an extra 10% off when you shop at Gap stores
• Returns don't require receipts

Lowe's Advantage Card

Don't forget about the all-too necessary home improvement retail card. For house projects, homeowners make constant trips to the hardware store, so the Lowe's Advantage Card comes in handy. With the Lowe's Card, there's no annual fee. It tends to be a better card than most other home improvement cards with its unlimited 5% cash back (although this is a closed-loop card). You can also use it for special financing for large purchases.

Benefits of the Lowe's Advantage Card:

• Unlimited 5% back off qualifying Lowe's purchases
• The option of promotional financing (this opts you out of receiving the 5% back rewards)

My Best Buy Visa Card

Upgrading and buying new tech is expensive. The My Best Buy Visa Card can help. Best Buy technically has 4 credit cards through its partnership with Citibank, but with the open-loop card, you can double up by earning rewards when making purchases at Best Buy and everywhere else. Depending on what card you qualify for, you could be paying an annual fee of $59, but some of the Best Buy cards have no annual fee.

The My Best Buy Visa Card offers:

• Earns 5% back on Best Buy purchases
• Earns 6% back for Elite Plus members
• 2% back for dining
• 1% back on everything else
• 10% back the first day you open the card, or deferred interest financing on purchases over $299

The Deal on Retail Credit Cards

Even if you shop at your favorite stores, you'll still want to research all of your options. General-purpose credit cards that aren't attached to that particular retail store like Chase, Capital One, or Discover may even offer better rewards for your shopping. But if you have fair credit that could stand for improvement, qualifying for one of these retail store credit cards might be easier at first.

Retail credit cards are a great idea if you find yourself heading back to your favorite stores. Most of them offer sizable cash back on purchases made in their stores or online, sometimes with added perks like free shipping, extra days for returns, and rewards programs with even higher-tiered cash back. These cards are also a good stepping stone for credit newcomers looking to build their score because, as mentioned previously, they're easier to qualify for with fair scores.

Pay attention to the catch: it's often higher interest rates. While the rewards are quite nice, you'll be hit with higher interest if you don't pay off your balance in full each month. Also, try to avoid a store credit card if it has an annual fee. Otherwise, it could negate your savings per year. But the bottom line is that as long as you use your retail credit card responsibly, you'll end up saving money when you shop.