Thread: JCPenney Credit Card Warning

Warning: Do not apply for the JCPenney credit card without seeing this review! Here’s why the application might be a mistake.

I actually like shopping at JCPenney stores! When it comes to scoring a good deal on clothes, shoes, jewelry and sometimes even furniture, JCPenney is THE department store to go to. Unfortunately I can’t say they offer the best credit card deals. Take a look for yourself to see why…

Among the highest APRs ever
I'm strongly against credit card debt for obvious reasons, but at the same time, if someone does have a balance I think they should be treated fairly, right? Well judging by the 26.99% listed on the card's application, I think it's safe to conclude they are not charging a fair or even semi-reasonable interest rate.

As if that’s not bad enough, there is also a minimum interest charge of $2. So when you are charged interest, you will be charged at least that amount. When you think about it, that means in theory you might end up paying more than 26.99% interest if your balance was small and the interest charges would have normally been below that amount.

Rewards with the card vs. without
What’s so ironic is that the rewards aren’t much better than the standard JCP Loyalty Rewards program (which you don’t need a JCPenney credit card to get). Compare for yourself to see…

JCP Loyalty Rewards without the credit card

• 1 point per dollar is earned on purchases
• 250 points equals a $10 reward certificate – that equals out to a 4% rebate on spending

JCP Loyalty Rewards with the credit card

• 1.25 points per dollar is earned on purchases
• 250 points equals a $10 reward certificate – which means a 5% rebate on spending

As you probably know, sometimes there are special purchases that will qualify you to earn double points the following month. Keep in mind that is not just for credit card holders... regular Loyalty Rewards members without the JCP card will also earn double points in that scenario.

Conclusion? Only a trivial number of additional points are earned with their card. You're only earning an additional 1% thru their card's reward program. Think about it... instead you could combine the regular JCP Loyalty Rewards and pay using a credit card with 5% cash back to earn even more (4% from the Loyalty Rewards + up to 5% from your own cash back credit card).

To add insult to injury, if you study the fine print on their application you will see that points expire fast:


By the way in case you're wondering, when it comes to the number of points you earn per dollar, there is no difference between the JCPenney gold status and platinum status. As you see above, more $10 certificates are earned but each certificate costs the same number of points (250) regardless of whether the level is regular, gold, or platinum.

The new account promotion is a big yawn
As is typical at most department stores, when you apply for a JCPenney card and are approved, you get a discount of 20% off for the first day (at least that was the current offer as I’m writing this). This may sound like smart way to save money but here’s why you should reconsider…

How much will you really spend the first day?
JCPenney’s clothes are very affordable, so odds are you will rarely spend a ton of money there in a single day. Even if you spend $300, saving 20% on that would only equal $60. That’s not very exciting when you consider there are major credit cards out there that give signup bonuses significantly higher than that.

Is it worth the hard credit inquiry?
Whenever you apply for credit or a loan, a so called “hard” credit inquiry (a.k.a. credit check) is done. Did you know that having too many credit checks within a 12 month period can actually hurt your credit score? This is why you don’t want to apply needlessly for the credit cards you don’t really need or want.

There are few additional benefits
As is typical with store cards, there are the occasional sales and specials for cardholders, but other than that, I don’t see any benefits listed on the JCPenney card application that I would consider special or worthwhile.

Verdict?
As you can see, there are few good reasons to apply for a JCPenney credit card. The only people I might recommend the card to are those with bad credit since it’s not extremely hard to get approved for. JCPenney's requirements for approval are easier than most major credit cards, so after bankruptcy or for rebuilding credit make sense. For everyone else, the high interest rate and lackluster rewards makes this card end up in the “avoid” category.

You made some very good points. I certainly agree that customers paying 26.99% interest isn't fair when other companies are charging less. Guru you are certainly correct about this.

What about people who work for JCPenneys. Do you think this is a good idea for them to get the card?

What about for everyone who has applied for a Chase Freedom, Sapphire, Bank of America, Discover card, Citibank and been denied. In addition to recommending them an Orchard Visa credit card would you recommend the JCPenney credit card?

Which card do you like better, the Kohls card or JCPenneys? Just curious as to which of the cards you like better. You mentioned JCPenneys is very affordable.

How about between Neiman Marcus and JCP which card do you like better?

You mentioned you recommend this card to those who have bad credit since JCPenney is not difficult to obtain. If this is so, then it will really benefit those who need to rebuild their credit score. My only concern is the high interest rates, though.

If you pay interest on cards don't get this charge card. You will lose any rewards you build up, they will be a wash. Do you plan on working at a JCPenney's?

JCP often sends 20% off entire-purchase-with-card coupons. I think being able to save 20% every time you shop there is a great incentive. In addition, JCP store credit card is issued by GE Money or GE Capital Bank (or whatever they call themselves these days), which is a great way to establish credit with this lender - it also issues store cards for many other big department stores, which also offer big savings for card holders.