What’s the best credit card to get? It depends on you. All credit cards are what is called “unsecured” debt. This means that you are extended credit simply by promising to repay – there is no collateral to be lost if you fail to pay. But there are two major types of credit cards: the store card and the universal card.
A store card refers to a credit card that is sponsored by a specific store and can be used only at that store, or chain of stores. Sears, for example, has a credit card that you can get which you can only use at a Sears store or Kmart. Wal-Mart has a credit card that you can get which can only be used at Wal-Mart or Sam’s Club. The list goes on.
Store cards usually are backed by an actual bank. For example, Citibank actually manages Sears credit cards, though you will only see this in the fine print. You will see “Sears” on the bill, pay with a check payable to Sears or through their website, and, at least as far as you know, call Sears with questions. You may see Sears or Citibank on your credit report. The same is true of Wal-Mart, whose credit card is administered by GE Capital. Is the store card the best credit card to get? It depends on your needs and whether you shop that store often. But often these cards offer credit card easy approval, at least easy compared to universal cards – this is why store cards can be a good place for people building their credit.
A universal card is one that can be used at many places – anywhere that accepts that card. The most popular of these are Visa and MasterCard, followed by American Express. Discover also has a strong presence in the marketplace. These cards are not actually administered by Visa, etc., but by individual banks who are licensed to work under these umbrellas. These cards are accepted at millions of places around the world.
There are pros and cons to both types of cards so you need to do a credit card offer comparison looking not just at interest rates but at fees and benefits. But, for the most part, universal cards win out. Store cards can be easier to get if you have little or poor credit, which is their best selling feature. Another positive of store cards is that often they will come with benefits, such as getting a discount when you pay for items in the store using that card or getting access to long-term financing without interest. And store cards rarely have annual fees or origination fees, though they usually result in you being sent sales announcements and discount offers – whether that’s a gift or a curse is up to you to decide.
Universal cards, however, provide much more versatility. You can use them to rent cars, reserve hotels, buy online and so much more. These cards also have special features, like MasterCard’s World Master which makes travel easier and is accepted at more than 32 million locations. These cards often offer the ability to earn rewards, like flying miles and cash back. They can also have various fees, which you need to be aware of.
Choosing the best credit card to get, deciding between a store card and a universal card, depends upon your purpose and needs. If building credit is all that matters and you are afraid that you can’t handle the responsibility and temptation of a universal card then a store card might be a good deal. But if you want the ability to shop wherever you want to then the versatility of a universal card might be better.
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