How the J. C. Penney Credit Card Works: Benefits & Rewards (JCP)

Like most large department store chains, the J. C. Penney Company Inc. (JCP) offers a perk-filled retail credit card, both at the checkout counter and on its website. Frequent shoppers may find the J. C. Penney credit card quite rewarding, but it is not without its downsides and important caveats.

The J. C. Penney credit card is a traditional store-only card with no Visa, MasterCard or other affiliation. Purchases can only be made in physical J. C. Penney stores, its website and J. C. Penney-owned Sephora.

The "hook" for making customers fill in an impulse application is an instant 15% discount on the current purchase, with a few exceptions. Major appliances and the Modern Bride Diamond Vault only receive a 5% discount. Other exemptions are Nike, Sephora, installed flooring, services, service plans, gift cards and all types of purchases from stores that are closing— none of which receive automatic discounts.

Purchases using the card accrue points at a rate of one point per dollar spent. The points count the same regardless of whether it's furniture, clothes or some other type of merchandise or service. Once 100 points is reached in the same month, the points can be exchanged for a $10 gift card. The monthly limit is 1,000 points, meaning that the maximum amount of gift cards that can be earned is $100 in any given month.

Those who spend at least $500 in a single day on two separate occasions qualify for a Gold card. Doubling that to at least $1,000 per shopping spree on two separate days earns a Platinum card. These levels earn points at the same rate as the Basic card but receive a number of extra perks, such as additional discount coupons, vouchers, free shipping, access to exclusive sales events and even a birthday present.

Cardholders may also qualify for special financing on major purchases, such as furniture, jewelry, appliances and other big-ticket items.

Frequent J. C. Penney customers, in effect, get an extra 10% off everything, but it is the binge shoppers who stand to gain the most. By qualifying for the premium levels, these customers can seize the opportunity for big savings during the special events, while racking up regular points.

Department store giants Macy's Inc. (M) and Kohl's Corp. (KSS) are the main competitors, with similar reward cards as J. C. Penney.

Macy's credit card belongs to the American Express network and can be used wherever AmEx is accepted. All purchases made in the first two days get 20% off at up to $100 (with a few restrictions). Cardholders can earn up to 3% off on all purchases at Macy's and 1% elsewhere, and using the card earns rewards toward $25 gift certificates, depending on their membership levels.

The Kohl's credit card is not affiliated with Visa or MasterCard and can only be used for in-store purchases. Kohl's offer up to 25% off the first purchase, 15% off the second, and guarantees at least 12 special offers of 15 to 30% off every year. Those who spend more than $600 qualify for an upgrade to Most Valued Customer (MVC) status and get at least 18 special offers.

The J. C. Penney card is clearly intended for frequent shoppers, as any unspent points expire at the end of each month.

The annual percentage rate (APR) is 26.99%. This is considerably more than most cards issued by banks and financial institutions (typically around 15% for customers with good credit). Retailer reward cards generally have higher APRs, but both Macy's and Kohl's have lower rates than J. C. Penney does.

Credit card review sites paint a universally poor image of J. C. Penney's credit card customer service. The complaints range from accidental cancelations and wrongful smears on credit reports, to a lackluster and confusing website. Both Macy's card and Kohl's card have higher customer-satisfaction ratings on these sites.