Most store-branded accounts are an absolute ripoff. So how do the Banana Republic Visa and store cards in 2013 compare? Should you sign on the dotted line or run?
1 application = 2 card offers?
First of all you need to be aware that you can't choose which one you apply for. When you fill out the application, the card you get (if any) will be based on your credit:
Their Visa only gives 1% everywhere , so you will want to get a different card like this for outside their stores:Signup Promotion = Sucky
- Bananacard: This falls under the definition of a traditional store charge card. It can only be used at their affiliated stores. This one will be easier to qualify for so if you have fair or bad credit, you will be more likely to get approved for this one.
- Banana Republic Visa Card: This is slightly different in that it operates on the Visa network so can therefore be used outside their store, too. I would estimate that the credit score requirements to be approved for the Visa would be close to a 700 FICO.
No big surprise here... Banana Republic gives you the ol' 15% off the first purchase for signing up for their card. Unless you plan on dropping a grand or two on your first purchase, it's hard to get excited over 15%, especially when there are cash back cards with promotions worth substantially more.
Interest Rates = Lose-Lose Situation
If you ever carry a balance – even if that’s only for a month – then you definitely want to stay far away from these cards. At the time of this review, the APR on the Banana card is 24.99% percent and the Visa version isn't much better at 23.99%... so you get a loser APR either way.
Acceptance = Not Too Shabby
Regardless of whether you get the Visa or the store card, the nice thing is that you can use your credit card at Banana Republic's sister stores which are: Gap, Old Navy, Piperlime, and Athleta (a lot more versatility than most store cards). Plus, you earn rewards at all those places.
The Rewards Program = A Pleasant Surprise
For both of the Banana Republic credit cards you're going to be earning 5x points not just at their store, but also the affiliated stores mentioned above. Every 1,000 pts = $10 reward certificate (so it's basically a 5% rebate). That makes this a rewards programs that's a lot more lucrative than most credit cards in this category, which typically only reward you at one retailer.
And everywhere else? If approved for the Banana Republic Visa you're only going to be earning 1x points elsewhere = 1% rewards. That's average, so no major complaints there.
Did you know you can also earn 5% at BananaRepublic.com if you have a Discover card?
Simply click thru to their website from your Discover account and you'll be credited 5% cash back for it (10% during the holiday season).
In addition, thru 12/31/2013 Discover is giving 5% cash back for ALL online purchases, regardless of whether you access them thru their website or not. Milk this while you can:
Benefits = Better Than Expected
On the store and Visa card the benefits are fairly basic:
Nothing too exciting so far, but if you upgrade to the Banana Republic Luxe benefits then it gets interesting. Your account is upgraded to the "Luxe" level when you spend $800 on your Banana Card or Banana Republic Visa Card in a calendar year at Banana Republic/Gap/Old Navy/Piperlime/Athleta (spending elsewhere doesn't count). These are the perks:
- A birthday offer
- Every Tuesday get 10% off most purchases at Gap, Old Navy and Piperlime (but not Banana Republic)
- So called "exclusive offers and promotions" (at least that's what they say on the application)
Admittedly, most of the Luxe benefits are fluff (who needs free shipping when you can usually find coupon codes, right?). However there is one feature it gives that could definitely come in handy and that is the free basic alterations. If you're someone who wears a pant length between 30 and 32 or 32 and 34 like I do, then this could a useful benefit you'll get a lot of use out of.
- Basic alterations for free on Banana Republic purchases
- No charge shipping for online purchases
- "Choose Your Own Sale Day" offer for a 15% discount
- Different offers and sales
- Separate customer service phone number
Yay or nay?
At the end of these cards are a lot better than most retail offers since you're (a) able to earn higher rewards at more than one place, and (b) the 5% is respectable.
If you're a Banana Republic shopaholic then it could make sense, especially with the Luxe benefit for free basic alterations. However keep in mind that in order to keep the Luxe status, you have to keep spending $800+ yearly at their stores.
One last caveat - the credit limits: The Credit Utilization Rate (CUR) is a calculation used in credit scoring that measures what percent of your credit limit you use. Many credit experts recommend always keeping that number below 25% on any given credit card account.
On major credit cards that is usually easy to do because the limits are often several thousand dollars and up. Unfortunately, store-only cards are notorious for giving low limits. When it comes to the Banana Republic card, on the Consumerist website a poster named Danielle alleges that her account only has (or had) a limit of $100. With a low limit like that, she obviously wouldn't be able to buy much if she wanted to keep her credit utilization below 25%.
I've seen a lot of negative customer reviews of people whining about low credit limits on this card so keep that in mind. However if you have a good credit score and are given the Visa, my guess would be the limits will be average.