Open loop credit cards may help you cash in on rewards and perks at certain stores. But they do have a price for their convenience.
"With these open loop cards, you can use them at any store, so you can use them to buy your gas or your groceries," said Kimberly Palmer of nerdwallet.com.
Open loop cards are becoming more common. "Every day we're seeing companies, stores, issue cards, so Ikea recently issued a credit card. So did Starbucks and Uber," explained Palmer.
She says they can often be richly rewarding.
"Amazon Prime Visa is one that really stands out because you have such a high reward rate at Amazon, also with Whole Foods. And then you also earn rewards when you buy gas, at restaurants. And so that's a huge benefit to consumers," said Palmer.
The rewards come with cards from stores such as Target, Home Depot, Banana Republic and Kohls.
Why are stores charging onto the "credit anywhere" scene?
Palmer tells us, "They want to have consumers thinking of them first when they look in their wallet, and when they see that store card in there, that reminds consumers to shop at that store."
Open loop credit cards are more likely to carry fees, so make sure you read the fine print before using one. Also, pay attention to the interest rate.
You may just be better off using a closed loop card, which can be used only in a single store or group of stores. Those rarely come with fees.
CONVENIENCE AT A PRICE: Are open loop credit cards worth it?
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