Capital One and Walmart just announced 2 credit cards that offer up to 5% back. Should you get one?

• Walmart and Capital one just announced two new Walmart co-branded credit cards launching on September 24.
• Both cards will offer 5% back on Walmart.com purchases, and neither card has an annual fee.
• One option, the Walmart Rewards Card, is meant for applicants with lower credit and can only be used at Walmart.
• The rewards on these two cards are competitive and compare favorably to options from Best Buy and Target, but consider whether you'd be better off with a non-store credit card before you decide to apply.

It's not everyday that the world's largest retailer performs a makeover on its credit cards, but that's what just happened. Walmart just announced two new no-annual-fee cards in partnership with Capital One: the Capital One Walmart Rewards Mastercard and the Walmart Rewards store card, both of which will be available starting on September 24.

Read more: The best no-annual-fee credit cards

Capital One Walmart Rewards Mastercard

There are two ways to earn rewards with a Walmart card. First, you could apply for the new Capital One Walmart Rewards Mastercard, which can be used anywhere that Mastercard is accepted.

This card features 5% back on purchases at Walmart.com, including Walmart grocery pickup and delivery. For the first 12 months from opening your account, you can also receive 5% back on in-store purchases when you use the Walmart Pay app.

After the first year of this introductory offer, you'll earn 2% back on Walmart purchases in stores, and you'll always earn 2% back at restaurants and on travel purchases. Finally, you'll earn 1% percent back everywhere else, which is the standard non-bonus earn rate for most credit cards.

Thankfully, this card has no annual fee and no foreign transaction fees.

Capital One Walmart Rewards Card

The other new card being offered is the Walmart Rewards Card, which can only be used at Walmart stores, Walmart.com, and at Walmart fuel centers, including Murphy gas stations.

One advantage of this card is that it's offered to customers who don't have strong enough credit to qualify for the Capital One Mastercard. However, Walmart Rewards Card holders will earn the same 5% back on purchases made at Walmart.com and on the Walmart app, and receive the same 5% introductory offer for using Walmart Pay in stores for the first their account's first 12 months. Once the introductory offer ends, these cardholders will receive an unlimited 2% back on Walmart purchases in stores and at Walmart fuel stations.

Read more: How to build credit

Redeeming rewards and other Walmart card benefits

Capital One offers many easy ways to redeem your rewards, and you can do so at any time and in any amount. Award options include statement credits, travel reservations, gift cards, and during online checkout at Walmart.com. Or, you can use your rewards to pay for recent purchases using Capital One's Purchase Eraser.

While these cards don't break much new ground technologically, they do have a few interesting features. For example, you can apply for these cards using the Walmart app, or even over text message. And these cards are integrated into the Walmart Pay mobile wallet, so you don't even need to take your card with you to go shopping.

How do the new Walmart cards stack up to competitors?

Earning 5% back is a pretty high bar for a store credit card, especially one from a retailer that competes primarily on price. There are a few hoops to jump through to get the 5% back - for the first 12 months, you can get 5% back on in-store Walmart purchases, but only when you use the Walmart Pay app, and after that the 5% is limited to Walmart.com purchases. Still, that's a strong return on spending.

One clear competitor is the Target REDcard, which offers you 5% savings on all purchases, and includes features like free two-day shipping and an additional 30 days to complete returns. However, the Target REDcard is only available as store charge card or a debit card, so you can't use it to make purchases anywhere other than Target. Both cards have no annual fees.

The Amazon Prime Rewards Visa Signature Card from Chase and the Amazon Prime Store Card both offer 5% back at Amazon.com, so long as you're an Amazon Prime member. The Amazon Prime Rewards card also offers you 2% back at restaurants, gas stations, and drugstores, and 1% back on all other purchases. It has no foreign transaction fees, and neither card has an annual fee.

Read more: Amazon Prime Rewards Visa Signature card review

The My Best Buy Visa Card from Citi offers 5% back on Best Buy purchases, which rises to 6% for Elite Plus members of the store's rewards program. It also offers 2% back in rewards on dining and grocery purchases, and 1% back on all other purchases. It currently offers a limited time 3% bonus on gas purchases too. There's also a My Best Buy store card that's not part of the Visa payment network. Both cards offer financing options that you can choose instead of rewards, and there's no annual fee for either card.

Considering non-store card options

There's also good case to be made for avoiding store cards altogether. Store-branded credit cards are notorious for charging extremely high interest rates, so if you ever need to carry a balance, you'll want to steer clear in favor of a card with a lower APR (and ideally a 0% intro APR offer).

Beyond that, many people shop at the store that's most convenient for them at any time, and don't always return to the same place. For these shoppers, it can make sense to choose a credit card that offers a high level of rewards on all purchases, or one that features bonus categories for specific purchases.

Read more: The best credit cards for groceries

For example, the Chase Freedom offers 5% cash back on up to $1,500 spent each quarter at categories of merchants that change every quarter. The Discover it® Cash Back and the ABOC Platinum Rewards Mastercard® have similar rewards programs.

Another strong option is the Blue Cash Preferred® Card from American Express, which offers you 6% cash back on op to $6,000 spent each year at US supermarkets (then 1% back) and on select US streaming services. It also offers 3% cash back on transit and at US gas stations. And while it has a $95 annual fee, it offers new applicants $250 in cash back after spending just $1,000 in new purchases within three months of account opening.

Read more: The best cash-back credit cards

Bottom line

Walmart is the world's largest retailer in large part due to its focus on offering the lowest-possible prices, so it should come as no surprise that its new credit cards deliver very strong rewards.

The new Walmart Rewards Mastercard and Walmart Rewards Card are competitive with credit cards from other major retailers like Best Buy and Target, especially thanks to 5% back at Walmart.com (though it would be even better if the 5% applied to purchases in stores beyond the first 12 months.)

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