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) Is the TJ Maxx store card good/bad?
(2) Are store cards in general good/bad?
(3) Would the card make sense for your personal circumstances?
TJ Maxx credit card: good or bad?
TJ Maxx has two different versions – a store-only version and a general use MasterCard which can be used at merchant locations anywhere world wide that accepts MasterCard. When you complete an application you aren’t given the option of which one you want, the one you receive (if approved) will depend on your credit history.
This is a bad deal because you might end up with the private label store-only version (which can’t be used everywhere like the version with a MasterCard logo), even if you didn’t want a store card when you applied. The inability to specify which version you’re applying for is a major negative because you have to endure a hard pull of your credit report without knowing which card you’ll be getting.
Here’s what both version have in common…
Rewards: At TJ Maxx, Home Goods, and Marshalls you earn 5 points per dollar for all purchases. 1,000 points = $10 rewards certificate which translates to earning a 5% rebate at these stores on your in-store purchases. There are no caps on the amount that can be earned. That’s not a bad deal considering the merchandise is already fairly discounted compared to full price retail stores.
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, that is extremely high, even for a store card! This is disappointing because even if you have great credit, you will get stuck with same rate as those who are less creditworthy. That’s simply not fair.
Signup Promotion: Both versions have the same new account offer of 10% off the first purchase. This is the typical type of promotion that hooks most people into getting store credit cards, but at least this one has pretty good ongoing rewards as where most store cards don’t.
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. Obviously, the takeaway should be to pay your balance in full each month with this card.
Second, 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 has earned a reputation for some pretty shady and consumer-unfriendly tactics.
First and foremost, many of them have really terrible customer service, which often gets outsourced. Just read reviews on this site or elsewhere and you will see that store cards garner a lot of complaints in this area.
Secondly, more often than not, store cards are designed for those with low credit scores. In turn, their interest rates can be artificially high compared to general use credit cards. It’s not unusual for the most creditworthy applicants to be given APRs in the 20% range.
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.
Will this card make sense for you?
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 typically 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 financial sense for you. Let’s say you spend $5,000 per year at their stores (which is highly unlikely)… the 5% rewards would equal an impressive $250. However if you make just a few hundred dollars in purchases, your annual earnings would hardly be worth noticing. 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, you would be much better off with a cash back rewards card like this Discover it or the Freedom by Chase, both of which give 5% in rotating categories (which sometimes include department and apparel stores).
This post was written or last updated May 20, 2015