The years of consumer excess have finally begun to take their toll on retailers — they constantly asked people to sign up for credit cards in exchange for discounts, and now that strategy is backfiring as consumers struggle to pay back their debt. Hopefully those of you that are carrying store credit cards in your wallets are not part of the growing population that are falling behind on their store credit card bills.
Stores like Target, Home Depot, and Macy's are caught in a bad place going into the holiday season. More and more customers are defaulting on their store cards, which can erode the stores' margins, and the higher delinquency frequency comes at a time when retailers are already anticipating the worst holiday sales in years. Customers with pattern defaults may discover their cards canceled without any say, as the banks that own the store credit portfolios are proactively trying to protect themselves.