Store credit cards can be tempting to savers, promising big discounts, loyalty rewards, and the ability to fund large purchases over time. But since store cards tend to have extremely high APRs, you can easily get into trouble if you run up a balance that you can’t pay off.
If you’re struggling to pay off your store credit card, rest assured. The average store credit card is no different than a traditional credit card, and if you can meet the requirements, a balance transfer credit card is a viable option.
Can I transfer my store card balance to a credit card?
Yes, you can transfer the balance from the store card to a credit card. In most cases, if you have a significant store card balance, this is probably a good idea.
The process for transferring a store card balance should be similar to planning for transferring a balance from a regular credit card. Assuming you qualify, transferring your store card balance should help you save on interest, eliminate unreasonable expenses, and have more flexibility in earning and redeeming rewards.
Benefits of transferring store card balance
Transferring your balance from a store card with a high interest rate to a new card with a lower current annual interest rate or a card with an initial 0 percent annual interest rate is usually a wise decision. If you’re debating whether you should apply for a new card and transfer your store’s credit card balance, here are a few reasons why it might be a good idea.
The store card’s annual interest rate is usually very high.
Store credit cards are notorious for their gigantic annual interest rates. To make matters worse, many store cards charge all cardholders the same APR variable, regardless of their credit history.
A survey of retail store cards by CreditCards.com found that the average annual percentage of a store card was almost 26 percent for a store-only card and about 22 percent for a co-branded store card. So if you have a large balance, you are likely to face an uphill battle to pay off your debt.
By transferring your store card balance to a new card — especially one that offers a low or 0 percent starting annual interest rate on balance transfers — you can put your interest payments on hold and work towards paying off your debt. Use our balance transfer calculator to see how much you can save on interest.
New card could offer more long-term value
Store cards are generally “closed loop” cards, meaning they can only be used in one store or group of stores. This can severely limit their long-term value, as you may only be eligible for rewards in a very narrow category of expenses, such as buying furniture or sporting goods. Also, any rewards you earn can only be used in the store itself.
While there are some branded “open cycle” cards that have a much broader coverage (for example, they can be accepted anywhere Visa or Mastercard cards are accepted), even these cards tend to fail because most cases, you still have to redeem your rewards in the shop.
If you’re currently focused on paying off debt and avoiding interest rather than earning credit card rewards, it’s important to keep long-term value in mind. Switching your balance to a more versatile credit card will almost always result in greater overall savings and more flexibility.
You can avoid the deferred interest trap
Many stores offer special financing for large purchases when you sign up for their store-branded credit card, and the ability to buy high-value items and pay off over time is one of the main attractions of store cards.
Unfortunately, most of these offers use a risky deferred interest model that can end up costing you a ton of money if you’re not careful. With deferred interest, if you fail to pay off the full amount of your purchase by the end of the promotional period, you will continue to earn interest up to the date of purchase.
If you’re approaching an interest deferral deadline and you’re worried you won’t be able to pay off your balance on time, a balance transfer may be just what you need to avoid accrued interest and a high current interest rate. To ensure that your balance transfer is completed before the end of the promotional period, it is very important that you start the process as early as possible, as you will not know in advance how long your balance transfer will take.
Get rid of the habit of overpaying
The discounts and rewards offered by a store card may encourage you to shop at that store more often—perhaps more often than you should. Also, since you will often have to keep shopping at a given store in order to use the rewards you earn, you may end up buying things you don’t really need or paying extra for items that are not fully covered by the rewards.
If you’re struggling with cost overruns, transferring your store card balance to a new card can be a smart way to break this cycle, pay off your debt, and get your financial habits back on track.
Cons of transferring the store card balance
Transferring a store card balance should be a fairly straightforward process and will likely save you money both in the short and long term, but there are a few caveats to keep in mind before you apply:
You may lose rewards and special privileges
One of the main benefits of department store credit cards is the exclusive discounts and perks they offer, ranging from birthday bonuses and one-time discounts to free shipping.
The Nordstrom Visa Signature* card, for example, gives cardholders a free alteration of basic clothing or a refund of alteration costs (depending on your loyalty program status).
The catch, of course, is that you’ll have to use the Shop Card to take advantage of these benefits. If you plan to transfer your balance and then stop using your store card, you may have to forgo these benefits.
In some cases, the only way to earn consistent cashback bonuses or points at a given store is to use a store credit card. Supermarkets such as Walmart, Target, and Costco, while popular, are difficult to categorize. Are these grocery stores? Department stores?
As a result, they are often not included in the bonus categories of most bonus cards. However, you can always keep your store card and use it whenever you need to (after you figure out your spending habits, of course).
You cannot qualify for a balance transfer card
Because store cards are generally easier to qualify, many people subscribe to them in hopes of building or rebuilding credit. But you will need good to excellent credit to take advantage of the best balance transfer offers. Instead of trying to make a balance transfer with bad credit, you might be better off focusing on improving your score through on-time payments and low credit usage.
Even if you’ve been approved for a new balance transfer card, the balance you want to transfer may exceed your new card’s credit limit, especially if you have multi-shop card balances. You will need to decide if you want to transfer a portion, apply for a multi-balance transfer (and pay the multi-balance transfer fees), or consider a debt consolidation loan or other payment plan.
It is also worth noting that you will not be able to transfer your balance to a new card from the same issuer. Most issuers do not allow balance transfers between their two cards.
Your new current APR might not be much better
If you fail to pay off the transferred balance within the 0 percent initial APR period of your new card, you may be left with a current APR that is as high as your store card, so make sure you have payment plan. on site before applying.
Your credit score may suffer if you close your store card
If you have little available credit, closing a store card can increase your overall credit usage and lower your credit score. Assuming your store card doesn’t charge an annual fee (few do), you’re better off leaving the account open. You can also use the card to buy something small at least once every few months so that the issuer doesn’t shut it down due to inactivity.
bottom line
While store credit cards can offer unique perks, rewards, and discounts at your favorite stores, their sky-high APRs make it hard to justify having a balance. Luckily, balance transfers are possible, and if you’re struggling to pay off a high-interest store credit card, it’s probably smart.
All information aboutVisa Signature Nordstrom card was independently obtained by CreditCards.com and has not been verified or approved by the issuer.
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The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.
