The Banana Republic credit card markets itself as offering rewards and value. But does it benefit you or is the Banana card just a ripoff?

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There’s Actually Two Different Cards…
First of all you should understand that there are actually two different ones:
Bananacard: This falls under the definition of a traditional store charge card. It can only be used at their affiliated stores.

Banana Republic Visa Card: This is slightly different in that it operates on the Visa network so can therefore be used elsewhere.
Which card will you get? Unfortunately, this appears to be outside of your control! Simply put, THEY reportedly make the decision based upon your credit profile. So if you want the store-only version or the Visa version, unfortunately you won’t get to choose.

The Interest Rate Shocker…
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 a crazy 23.99% percent! The APR on the Visa version goes up to 21.24%.

The rates on both go up even higher – 27.24% - if they decide you deserve the delinquency rate. According to the fine print, that could be triggered if you simply don’t make the minimum payment by the time it is due. So if you are someone that ever makes a late payment, then you may become a victim of this rate hike.

The Signup Promo: Are The Savings Really Worth It?
Like almost every store charge card, Banana Republic tries to offer an incentive to get you to signup (it only applies after application approval). Typically this is 10% to 15% off the first purchase made with the card. I understand why this sounds alluring, but you need to consider this decision more closely. Reportedly there are many negative things that have been associated with store-only cards in general.

For example, 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 Banana Republic credit card limit is only $100. With a low limit like that, she wouldn't be able to buy much if she wanted to keep her credit utilization below 25%.

On the topic of store cards in general, this is what About.com's Credit/Debt Management section reportedly says "Because store credit cards encourage high utilization, your credit score will drop more the closer your balance gets to your credit limit."

The Real Deal About The Rewards…
Most likely, this is the main reason you are interested in the Banana Republic credit card. But do the rewards really make sense? Well you’re about to find out the answer…

The credit card gives 5 points per dollar spent at Banana Republic, Gap, and Old Navy. If they give you the Visa card, then you will earn 1 point per dollar spent elsewhere. 1,000 points can be redeemed for a $10 gift certificate. That equals out to be a 5% rebate at their stores and 1% elsewhere. This is actually good as far as the rewards go, but when you take into account the other drawbacks, it’s hard to justify this reason alone.

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