New Capital One Walmart cards: Are they worth it?

Dear Cashing In,

I read that Walmart is redoing its rewards credit card and plans to offer a credit card with Capital One. Should I get it? Do you recommend one over the other? – Terry

Dear Terry,

You’re right – Walmart and Capital One announced last month two new rewards cards.

The new cards make Walmart competitive with other leading retail cards out there, such as Target’s REDcard, in that the rewards can be lucrative when you use the card at that retailer. In addition, the Walmart cards embrace a growing trend by trying to steer customers toward online and digital purchases.

Check out all the answers from our credit card experts.

Ask Tony a question.

See related:  Should I apply for a store card this shopping season?

What you need to know

Let’s take a look at the two new Capital One Walmart cards and then explore whether they might make sense for you:

Capital One® Walmart Rewards® Mastercard®

• Annual fee: None.
• Earning potential: Earn 5 percent cash back on Walmart.com purchases (including grocery pickup and delivery orders). You can also earn 5 percent back on in-store purchases in the first 12 months of card ownership when you pay using the Walmart Pay app, and then 2 percent after the introductory period. Earn 2 percent cash back on restaurants and travel and 1 percent back everywhere else.

Walmart Rewards Card

• Annual fee: None.
• Earning potential: Earn 5 percent cash back on Walmart.com purchases (including in-app purchases) and 5 percent back on in-store purchases in the first 12 months when you pay using the Walmart Pay app, and 2 percent back after the introductory period. Earn 2 percent cash back on purchases at Walmart fuel stations.
• Limitation: Can only be used at Walmart and Walmart.com.

As you can see, the main card is the Capital One Walmart Rewards Mastercard, which can be used anywhere that takes Mastercard. The slimmed-down store card is called the Walmart Rewards Card. It has many of the same features and rewards, but it can only be used at Walmart.

Of the two, the Mastercard is probably the better card because it is more flexible. But if your credit is only average, you might only qualify for the store card.

What kind of shopper are you?

The general rule of thumb on co-branded retail credit cards is that they can make sense for you if you are a regular shopper at that store. Receiving 5 percent cash back is a high rate of return – and this card is well-suited for people who can take advantage of it on a regular basis.

On the other hand, if you’re only an occasional Walmart shopper, you won’t see much of a benefit to having one of these cards. That’s because the cash-back earning rate at non-Walmart locations is 2 percent for restaurants and travel and 1 percent everywhere else. You can do better than that with other rewards credit cards.

In addition, the people who will find Capital One Walmart cards most appealing will be those who are comfortable with ordering online and using payment apps. That’s because the 5 percent back is only for Walmart.com purchases and in-store purchases in the first 12 months using Walmart’s payment app. It’s a little bit of a pivot to the future, with younger people tending to be more comfortable with technology than older shoppers.

The rewards structure also takes advantage of a growing trend toward grocery home delivery – which is eligible for the 5 percent cash back.

As usual, determining whether one of these cards is appropriate for you will depend on your shopping habits. If you regularly shop online at Walmart and are comfortable with mobile wallets, it might make sense. If you only occasionally shop there, probably not.