Do you like shopping at Walmart? If you visit the store on a regular basis, you’re likely to be approached by a cashier or another employee asking if you’d like to sign up for a Walmart credit card. They’ll emphasize the convenience of using the card, and the benefits (like a 5¢ a gallon discount on gas you buy at one of their gas stations). They may also talk about the special financing deals that you qualify for if you have a Walmart credit card.
But is getting the basic Walmart credit card really a good idea? Although you may be able to find some deals on merchandise at this chain, the Walmart credit card isn’t such a bargain. Here’s why.
There’s only one place you can use a Walmart credit card—at Walmart (online or in a physical store). If you’re planning on shopping at several different stores, you’ll have to make sure that you’re carrying another card with you.
Using more than one card can be a problem if you’re hoping to track your spending and keep on a budget. It’s a much better idea to rely on one credit card that can be used anywhere (with maybe one other as an emergency backup) so that you can easily monitor all the purchases you’re making in a given period of time.
You don’t earn cash back or rewards on the Walmart store credit card. If you’re going to be spending a lot of money at a store, wouldn’t it make more sense to use a card that will give you some percentage of your money back? (There are cash back credit cards that offer anywhere from 1 percent to 10 percent on the purchases that you make!)
The interest rate on the Walmart credit card can be as high as 22.9 percent! If you can’t pay your balance off at the end of each month, a hefty rate like that will mean you end up effectively spending a lot more for your purchases because of interest charges. If you know you’re going to have to carry over payments on a purchase for several months, look for a low interest credit card that offers lower annual rates or 0% interest for up to 18 months.
You could end up paying high interest rates on a purchase you thought would be interest free. Walmart is currently offering a promotion where you can pay no interest for up to two years on a single purchase of $150 or more, as long as you repay the total amount within that time. That sounds great—but there are some pitfalls.
Suppose you made a $500 purchase and have 24 months to pay it off. Then you have a medical emergency and can’t repay the last $50 of your purchase within that 24-month period. You’ll be charged interest for the entire 24-month period on the total purchase! That’s 24 percent, over two years, on $500!
A Walmart credit card won’t build your credit rating in the same way that a Visa or MasterCard or Discover card will. The companies that calculate credit scores give less weight to store credit cards than they do to bank-issued credit cards. If you’re trying to boost your credit score, steer clear of the Walmart credit card and similar store cards and get a bank credit card.