Q: I shop a lot at TJ Maxx and between myself, two kids and my husband, we spend quite a bit of money there. I have considered applying for their MasterCard but because it’s a store credit card I’m hesitant. Do you think it would be a good one for me to have?

A: There are really three questions here, so let’s tackle them one at a time:

(1) Are store cards in general good/bad?
(2) Is the TJ Maxx store card good/bad?
(3) Would the card make sense for your personal circumstances?

First let’s talk about store cards in general…

When it comes to credit cards issued by department stores and other retailers, you are smart in being hesitant. Overall, the store card industry is notorious for some unscrupulous practices.

First and foremost, many of them have horrendous customer service. Just read reviews on this site or elsewhere and you will see they might very well be the most complained about credit card category.

Secondly, more often than not, store cards are tailored to accommodate those with less-than-stellar credit scores. In turn, their interest rates can be atrociously high. It’s not unusual for even the best, most creditworthy applicants to be given APRs in the 20’s.

Third, due to the quality of the customer base, the credit limits on some store cards are significantly lower than what you would expect from a bank-issued credit card.

That may not bother you but here’s what you might not realize: your credit score can be affected by the percentage of credit limit used (known as the credit utilization ratio). As a rule of thumb, the less you use, the better. If you’re regularly using 30% to 50% or more of your credit limit, that might negatively impact your score. And if a store only gives you a limit of $300, using just $90 of it would already put you at 30%. See how that could be a problem?

However let me be clear… the above points are not in reference to the TJ Maxx credit card specifically. Rather I am just referring to the store card industry as whole and what you will find more often than not. In this industry there are good and bad apples… more of the latter, but you will find a few that don’t come with the above drawbacks.

TJ Maxx credit card review: good or bad?

TJ Maxx has two different versions – a store-only version and a MasterCard. When you fill out an application you can’t specify which one you want, the one you get (if approved) will depend on your credit history.

Here’s what both of them have in common…

Signup Promotion: 10% off the first purchase
Rewards: At TJ Maxx, Home Goods, and Marshalls it gives 5 points per dollar. 1,000 points = $10 rewards certificate which means the card gives a 5% rebate at these stores. There are no caps on the amount that can be earned.
Annual Fee: none
Interest Rate: As I write this the credit card application lists a single rate tier of 26.99% for both cards. Obviously, this is quite high even for a store card!

Here’s where they differ…

The TJ Maxx Rewards Platinum MasterCard can also be used any place MasterCard is accepted. On those purchases, it gives a straight 1 point per dollar. Also, it provides many of the same benefits you’ve come to expect from a MasterCard issued by a bank. In short, this is comparable to a regular credit card.

Verdict? For shopping at TJ Maxx stores and affiliates the rewards are quite respectable. However, the interest rate is insanely high.

Will this card make sense for you?

Obviously if you ever carry a balance the answer is a big “NO!” But that aside, when it comes to store cards I always ask people this simple question:

How much do you spend per year at their stores?

Usually this is an easy way to determine whether a TJ Maxx card (or any given store card) will make sense for you. Let’s say you spend $5,000 per year at their stores… the 5% rewards would equal an impressive $250. However if you make just a few hundred dollars in purchases, your annual earnings wouldn’t be nearly as exciting. For example, $500 per year would net you only $25 worth of reward certificates.

If you don’t shop enough at TJ Maxx to make it worth your while, I would recommend either the More by Discover or the Freedom by Chase, both of which give 5% rebates at clothing retailers for portions of each year.