Every major department store or big retailer offers their own branded credit card. You cannot go to one of these stores without seeing all the promo material at the check-out or receive an offer from the cashier to sign-up for the card. Some of the offers sound really good depending on what you are purchasing (20% off any of your purchases today, etc). Some of them are just bad – my personal worst was when I was buying a greeting card at Target and the cashier asked me if I wanted to open a Target credit card because I could save 5% on my purchase. 🙂 I was not going to open a credit card (and take the subsequent hit on my credit score) for 10 cents!
So what offers should you except? Are point credit cards really better than the store/retailer branded credit card? Many times, YES! Take this offer for example. I see this around quite often and have seen people taking the application as they pump their gas.
5 cents off per gallon sounds pretty good, right? That has to be better than the Chase INK Bold or the American Express Premier Rewards Gold card since they don’t partner with Sunoco, right? Let’s do the math:
- The national average for gas prices is $3.48 per gallon
- That yields a savings of 5 cents at Sunoco on every gallon (that appears as a statement credit at the end of the month) – effective final price per gallon, $3.43
- The Chase INK Bold and American Express Premier Rewards Gold cards give 2 points per dollar spent on gas (the American Express gives 2 points per dollar at stand-alone gas stations)
- That yields a value of 7 points per gallon of gas (which you receive as points at the end of the month). If redeemed as a statement credit (with Chase), that results in a final effective price of $3.41 per gallon.
An extra 2 cents per gallon with a generic rewards card instead of the branded card? Yes! And that is just if you redeem it at the very pedestrian 1:1 ratio for statement credits. With just transferring those points to one of the many travel partners, it is very easy to get at least 14 cents of value out of that gallon of gas!
How about department store cards? They will generally offer promotional offers throughout the year to their cardholders as a way to motivate them to a) shop at their store and b) use that card as their payment source. Depending on the offer, it may be best to use your rewards card (like Chase) and shop through their online shopping portal to increase your reward possibilities. For example, Kohls is very often a 10x point retailer through the Chase portal. That means that ever $1 you spend at Kohls through the portal will yield 10 points. If your Kohls card is not offering a better bonus, then use the Chase card. Even if the Kohls is giving you 15% off, it still may be better to use your Chase card if you are saving points for a particular trip (since you should be able to convert that value to at least twice the value you are earning).
In the case of electronics (like Best Buy), you need to consider the non-point benefits. When I purchase something at Best Buy, I like to use my American Express card because of the benefits I receive – return protection (if I want to return an eligible item within 90 days and the retailer won’t take it back, I can send it to American Express and they will refund me the price of the item up to $300), purchase protection (if an item suffers an accident or is stolen within 90 days, American Express will cover the cost of the item up to $1,000) and warranty extension (American Express will extend the warranty up to a year after the manufacturer’s warranty expires).
Of course, there is always an exception – something like the Amazon Visa from Chase. They are currently running a promotion where you can receive 40% off of the basic Kindles or off of Amazon branded Kindle accessories (only for cardholders that use the card). They run a different promotion each month with at least 20% off different categories. For something like that, it is a no-brainer (especially since the only way to get better than 1 point per dollar at Amazon is to purchase Amazon gift cards at office supply stores using your Chase INK Bold card).
As with most things, your mileage may vary, but even if you have no travel aspirations, you can still see how it is better to have a rewards card with someone like Chase or American Express than simply using a store card.
Chase Sapphire Preferred Card – Application (I do not receive a commission for this card)