Store Card: What They Are & How To Determine If You Should Get One

Improving your credit score is nearly impossible if you already have bad credit. Credit card companies are less likely to give you a credit card because you’re seen as too much of a risk. Because of this, your options for boosting your credit score are limited. Store cards are designed to help you boost your credit with no credit or employment check necessary, but there are some drawbacks to be aware of. Here’s how to determine whether or not a store card is right for you.

By: Heather Hanks Dec. 10, 2018

What Is A Store Card & How Do They Work?

Store cards are similar to a credit card with some limited features. While a credit card encourages you to use it just about anywhere, a store card will only allow you to use it in certain stores. They usually have a credit limit, and you have to make monthly payments to use the card. Additionally, they tend to charge a higher APR, which can make them more expensive. You may occasionally get lucky and sign up during an exclusive time where some of these fees aren’t quite as high. But, in general, expect to pay more for a store card.

So why use it then? Store cards are a good option if you have no credit or bad credit. Some companies allow you a guaranteed credit limit, but you must already have an active credit or debit account to sign up. They do not require an employment or credit check and the application to get one is quick. They will accept you even if you have no credit or bad credit. Most importantly, store cards report to a major credit bureau, which is a great way to improve your credit score if you’ve been turned down by other credit lenders.

The Pros and Cons of Store Cards

The top two store cards that can be used to improve your credit are Horizon Gold and Freedom Gold Cards. While they are not credit cards nor do they work like one, store cards are a good option if you’re satisfied with doing your shopping in one location. They tend to have higher fees, but it’s worth it if your goal is to sign on with a card that reports to a major credit reporting bureau and you have no other options for improving your credit score. Here is a breakdown of each.

Horizon Gold Card

The Horizon Gold Card is not a credit card, even though it looks like one. It’s a store card that you use at the Horizon Outlet online store, which is comparable to Wal-Mart. Your bill is to be paid in full every month, and your payment history is reported to one of the top three major credit reporting agencies for a chance to boost your credit score. This card requires a monthly payment of $24.95. Benefits of becoming a member include My Privacy Protection, My Universal RX, My Legal Assistance and roadside assistance.

Horizon Gold Card PROS

  • Reports to a major credit reporting bureau. This card reports your payment history to Experian, which is one of the top three credit reporting companies that help determine your credit score.
  • Responsible credit limit. The credit limit is $500, which is not enough to cover rent for most people. But it will get you started on making big purchases and reestablishing your credit. Having a higher credit limit might encourage people to spend more than they can pay back.
  • Privacy protection plan. The privacy protection plan allows you to get a free credit report once a year from each of the three major credit bureaus.
  • Prescription benefits. You can save up to 40% of the price of your covered prescription medications. You’ll need to check to determine which drugs are covered before you sign up.
  • Roadside assistance. This service allows you to have three service calls or towing requests for up to 15 miles. You must not go over the operator cost of $50. This includes coverage within a 30-day timeframe.
  • Legal assistance plan. This plan allows you to make a 30-minute phone call or online consultation with a law professional in your area.

Horizon Gold Card CONS

  • Expensive. This card costs almost $300 a year in monthly fees, which is more than most credit cards.
  • You must pay in full. Your bill needs to be paid in full every month instead of making payments.
  • Limited access. This card can only be used at the Horizon Outlet online store.

Freedom Gold Card

The Freedom Gold Card is very similar to the Horizon Gold Card with many of the same features. Both cards have the same policies for their privacy protection, roadside assistance, and legal assistance plans. They also charge the same amount of monthly fees at $24.95, which equals almost $300 a year. Both cards do not require you to go through employment or credit checks beforehand, and they can only be used at the Horizon outlet online store. Unlike the Horizon Gold Card, there is a one-time sign-up fee of $5 on top of the monthly payments.

Freedom Gold Card PROS

  • Reports to a major credit reporting bureau. This card reports your payment history to Experian, which is one of the top three credit reporting companies that help determine your credit score.
  • Not required to pay in full. Unlike the Horizon Gold Card, this company allows you to pay 10 percent of your balance each month.
  • Benefits plan. The Freedom Gold Card offers the same benefits as the Horizon Gold Card: a privacy protection plan, a prescription benefits plan, and roadside assistance.

Freedom Gold Card CONS

  • Hidden fees. In addition to the sign-up and monthly costs, there is a shopping and processing fee of $4.50 for all online items. There is also a late payment fee of $20 and a fee of $25 per infraction for returned or NSF payments.
  • Limited access. This card can only be used at the Horizon Outlet online store.
  • Expensive. This card costs almost $300 a year in monthly fees, which is more than most credit cards.
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Disclaimer

CreditNervana promises to keep our information as accurate and up-to-date as possible. However, you should always consult a financial advisor for specific questions about personal or business finances and investment opportunities, especially if you are looking in your area. Working with a trained professional who is familiar with your case is a safe and guaranteed way to make the best investment decision possible. Please review our terms and conditions before making any decision based on the information we provide. Financial institutions are constantly changing. Because of this, it’s a good idea to cross check the information you read here with any company you are considering working with.

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