Kmart Credit Card - A Bad Idea?

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Kmart Credit Card - A Bad Idea?

Postby CreditCardGuru » Sat Mar 16, 2013 1:47 pm

shopping cart sign
Want to apply for Kmart credit card? Before you proceed with the application, this Kmart card review exposes the pitfalls.

Kmart Credit Card Review

If you’re having difficulty finding information about the regular Kmart or Big Kmart credit cards, you aren’t alone. Why? Because after Kmart acquired Sears last decade, they switched over to the Sears credit card. So there’s no longer a credit card just for Kmart.

Is your credit bad, fair, or good? Whatever the case, the best alternative right now is using a pre-qualification tool. With it, you can find credit card offers matched to your own credit profile. Checking won't affect your score since it only uses a "soft" credit pull.

Since Kmart merged with Sears, it is possible to use the Sears card at both store. That card comes in two versions- one is for store-use only, while the other can be used anywhere MasterCard is accepted. But what do they offer you? It might not be what you think...

The regular (store-only) version:
This is probably the most common version of the Sears / Kmart credit card. You can apply for it at or in-person at a Sears store.

  • Interest Rate: 25.24% for purchases and 27.15% for cash advances
  • Rewards Program: Warning this program is deceptive in my opinion! On "qualifying purchases" bonus members can get 5% back in points for purchases at Kmart and But the catch is that 1,000 pts = $1 in rewards (with most credit cards it takes 100 points to earn $1 in rewards). So these points are worth about 1/10th that of the typical rewards card!
  • Benefits: Other than the typical coupons, the only other noteworthy benefit is access to your TransUnion TransRisk score (not to be mistaken with a FICO credit score).
This is a bare bones store credit card and the "Shop Your Way" rewards program doesn't make it much better. However the most logical reason to get is if you can't get approved for something better. If that describes you, then getting it as a means to rebuild your credit history would be logical. The TransRisk score - even though it's not a true FICO score - can still be a useful gauge for monitoring progress during rebuilding. In addition, here are some other recommendations for fair credit.

The MasterCard version:
To qualify for this will take a better credit score than the regular Kmart card. It can be used anywhere MasterCard is accepted. You can only apply for the MasterCard version in-store (not online).
  • Interest Rate: 25.24% for purchases and 27.25% for cash advances
  • Reward Program: This card used to pay 1 Sears Choice Reward point per dollar spent on all purchases. However it looks like they recently changed that and as of 2013, I see nothing on their website about it paying rewards. However you still do get the "Shop Your Reward" rewards at Kmart (like the other card has).
  • Benefits: Aside from the coupons, there are a few standard benefits through MasterCard such as Purchase Assurance and Extended Warranty Coverage on eligible purchases.
[imga=point conversion to gift cards"][/imga]
While it's true this is a step up from the regular card, the Sears Kmart MasterCard isn't much better.

For those grandfathered in with the old Sears Choice rewards... that's only 1 point per dollar and each point is worth less than one penny with most of the award options (examples pictured right). There were a few opportunities to get the standard $0.01 per point value (or higher) but just take a look at the right to see how many points it will take... a lot! You would have to spend $20,000 to earn enough points to get 1 cent per point or higher.

This is why the Sears Kmart credit card is such a poor choice for rewards. If you have decent credit, you would do better with a high cash back card.

Why the 0% financing offers might be a bad idea
So being that these credit cards offer few benefits and low rewards, the only reason left to fill out the application is for a financing offer, right?

Well before you do that, be sure you understand what "deferred financing" actually means:
Pay careful attention to the part I highlighted... see how risky that could be? When you get a normal 0% credit card from a bank (instead of a store) it won't levy back interest like that.

If you can't qualify for a 0% offer on a major credit card then you might have no other choice. But the next time a sales associate tries shoving a Sears Kmart credit card application down your throat, just make sure you remember how that 0% really operates so you don't get in over your head.

Company History
This company was founded in Detroit by Sebastian Kresge in 1899 and later changed its name to Kmart in 1962. Today they are the 3rd biggest discount retailer in the world. They may not get as much press coverage as Wal-Mart or Target, but the truth of the matter is that Kmart gives them a run for their money with extremely competitive prices. In addition, they also have a number of brands which can’t be found elsewhere. Today their current stores consist of Kmart, Big Kmart, Kmart Super Center, and Super Kmart. You can read more about their history on Wikipedia.
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