Retail Credit Cards: Still Out There But Harder to Get
Thursday, July 2nd, 2009As the credit card industry as a whole has been getting stricter and requiring a lot more information to assess credit risks, 
so too are retail credit cards. Those are the cards you get offered each time you go to a retail or department store’s checkout line. The hook to consumers is usually a decent discount on the shopper’s total amount, usually 15-20% simply for applying on site. Many consumers in the past have failed to really consider how much you are really not saving with your purchase over the long run.
Because of so much crisis in the economy, even retail credit card issuers have tightened the standards for application requirements and are refusing more consumers account than ever before. Every in the credit industry seems to be reevaluating how they do business mainly because they have to protect their own profit margins. Since the retail industry suffers when consumers are not spending, they have to watch their pennies and avoid as much risk as possible.
Retail credit cards are issued on two levels: private label, which are credit card issued through the retailer but financed chiefly by banks. In-house credit cards are solely owned and operated by the retailer. In today’s market, in-house credit cards are on the decline. Many have already made the decision to sell the credit card end of the business to a bank. Since banks primarily control retail credit cards these days, consumers will find it much more difficult to get a retail card because the applications must be approved by bank standards.
There are exception to that norm. Walmart, for instance, is on the verge of launching a new credit card that would be in-house and offer low interest rates as well as a low number of credit card fees. The advantage to consumers of a self-financed credit card is customers would likely get better terms than if it was bank financed. Walmart currently offers their credit card in conjunction with General Electric, a consumer lending powerhouse.
As bank-backed credit cards are getting tougher to qualify for, those stores that still manage credit cards in-house seem to be taking things one step at a time. There is an eye on the economy and a wait-a-see attitude. Some stores, however, are taking a more active approach to weeding out risky consumer accounts based on high risk geographies and the spending habits of consumers. The store-financed credit cards have more decision-making power than do the banks. They can pick and chose how to promote their credit cards to the consumer. While approval rates are down, in-house credit card use is not. Retailers have also begun to offer additional incentives to their in-house credit card customers. Those who have a card and have excellent credit may be entitled to additional savings and promotions that card holders without good credit do not have.
Essentially, it is still clear that credit scores matter as does your ability to use any kind of credit responsibly. Those consumers with good credit histories and consistently good credit scores will still find available the credit that they need. Those that do not maintain a good score or history will find it increasingly difficult to be accepted during the approval process.
