Store Cards and Catalog Credit: Is the Discount Worth It?

A store card saves you money only if you pay the full balance before interest is added. If you carry a balance, the interest can cancel out the sign-up discount within a few months.

What is a store card?

Store card is a credit card that usually works only in one store or one group of stores.

You often get one at the checkout, with an offer like “10% off today if you sign up”. After that, it works like any other card. You get a statement, a minimum payment, and interest on anything you don’t pay off.

MoneyHelper, a UK government-backed money service, says some store cards are charge cards. With those, you must clear the full balance each month or pay extra charges.

Some cards carry a store’s name but work anywhere. MoneyHelper calls these store-linked credit cards.

What is catalog credit?

Catalog credit is a shopping account that lets you buy goods online or by post and pay in installments.

MoneyHelper says repayment periods are often one or two years. It can be interest-free if you repay within a set time, usually three to 12 months. Some catalogs charge interest from the day you bought the item if you pay late.

The risk is the same as with a store card. Miss the deadline or a payment, and interest can build quickly.

Why do store cards often charge more interest?

MoneyHelper says store card interest rates are “often much higher than normal credit cards”.

The US consumer regulator, the CFPB, studied this in a report published in December 2024. These figures are from the US market, but they show how this kind of card works:

• In 2022, store cards charged an average of 27.7% a year. General credit cards charged 22.7%.
• As of June 2024, over 90% of store cards had a top rate above 30%. For general cards, it was 38%.

The CFPB gives three reasons:

1. One rate for everyone. Many store cards charge the same fixed rate, whatever your credit history.
2. Easier to get. The checks before approval are less strict.
3. Less income from stores. Most cards earn a fee from the store each time you pay. Store cards earn little of this, so they rely more on interest and late fees. (More on that fee in how credit cards make money.)

Is the sign-up discount worth it?

Here is the math. The rate below is an example, not a real card.

Say you buy a $600 item. The store offers 10% off if you open a store card. So you pay $540 on the card and save $60. The card charges 29.9% a year. You pay $40 a month.

Step 1. Monthly rate: 29.9 ÷ 12 = 2.49% a month.

Step 2. Interest in month 1: 540 × 0.0249 = about $13.

Step 3. Repeat each month: add interest to the balance, then take off your $40 payment.

Here is what happens:

How you pay	Time	Interest	Total cost	vs $600 full price
Pay the card in full at once	1 month	$0	$540	$60 cheaper
$100 a month	6 months	$47	$587	$13 cheaper
$40 a month	17 months	$127	$667	$67 more

At $40 a month, interest passes $60 in month 5. From then on, the discount is gone and you are paying extra.

This assumes you don’t add any new spending. It also assumes interest is added from the first month, which happens on many cards when you don’t pay in full.

What should I watch out for?

“No interest if paid in full” deals. The CFPB warns these can be deferred interest. If you don’t clear the balance in time, interest can be added back to the day you bought the item. In a CFPB example, a $180 balance left at the end of a two-year deal on a $4,500 purchase led to a charge of about $1,440. (See what “0% for 12 months” really means.)

Low credit limits. The CFPB, in a 2019 post, says store cards often have very low limits, so a single purchase can fill most of it.

Spending more in one store. The rewards and discounts usually only work in that store. That can pull you back to the same store.

Late fees. The CFPB found late fees make up about 25% of store card interest and fees, compared with about 7% on general cards.

Do this today (10 minutes)

• Find any store card or catalog account you have. Note the balance, the yearly rate and the minimum payment.
• Work out this month’s interest: balance × yearly rate ÷ 12.
• If there’s a “0%” deal, write down the end date and divide the balance by the months left. That is what to pay each month.

Nada does this math for you. Add your store card next to your other debts, see what it costs each month, and when it will be cleared. Get Nada

If you carry a store card balance, paying more than the minimum is the fastest way out. See why the minimum payment keeps you in debt.

FAQ

Is a store card the same as a credit card? Not quite. A store card usually works only in one store or a small group of stores. A normal credit card works almost anywhere. Some cards carry a store’s name but work everywhere. MoneyHelper calls these store-linked credit cards, and says their rates can be similar to normal cards.

Why do store cards often charge more interest? A 2024 CFPB report on the US market gives some reasons. Many store cards charge everyone the same fixed rate, whatever their credit history. They are easier to get approved for. And they earn less from stores’ card fees, so they rely more on interest and late fees.

Is the sign-up discount worth it? Only if you clear the full balance before interest is added. In the example above, a $60 discount is wiped out by interest in about five months when paying $40 a month. Paid over 17 months, the item ends up costing $67 more than paying the full price.

What is catalog credit? Catalog credit lets you buy goods online or by post and pay in installments, often over one or two years. MoneyHelper says it can be interest-free if you repay within a set time, usually three to 12 months. Some charge interest from the day you bought the item if you pay late.

Sources

Read in October 2026.

• CFPB: Issue Spotlight: The High Cost of Retail Credit Cards (December 2024)
• MoneyHelper: Store credit
• CFPB: Six tips to consider when you’re offered a retail store credit card

Written by the Nada team. Reviewed October 2026.

This is general information, not personal advice.