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Store Credit Card Strategy Backfires on Retailers

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.

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Join The Conversation
snarkypants snarkypants 7 years
i hate store cards. after spending too much time working retail, i just stopped asking people to open new cards. i got yelled at constantly, but i didn't care. i think it's funny that now they're having trouble. the main reason they want you to open their card is so they don't have to pay fees to other credit card companies. it's about time this cheapness bites them in the @ss
baybug baybug 7 years
I have one store card and I always pay it off. I only use it when I know there is a big discount to follow.
millarci millarci 7 years
I only have one store card and I always pay it off. :)
emsmiley emsmiley 7 years
Not to praise store cards, but if you have the card, especially a MAcy's card...use it! Then make a payment then and there with the cash you planned to spend! If a $100 item is an additional 20% off if I use the card and i had planned to pay cash, i'd use my card and then pay the $80 plus tax and walk away smiling! I also agree with paying well over the minimum. I paid off both Express and Vickies by paying 5 times the minimum and often paying every two weeks!
verily verily 7 years
If this means that Macy's will no longer accost me at the register, then I'm all for it. I usually just lie & say I have a card and no I don't want to use it. I really need to drop my Gap card. I haven't used it in over a year. I only got it for the initial 10% off on a big purchase. My Best Buy card often carries a balance, but I always pay it off before the interest kicks in.
CaterpillarGirl CaterpillarGirl 7 years
I dont understand how people cant make the minimum payment amount? if you cant afford it....why are you USING IT????
ilanac13 ilanac13 7 years
when i first started getting credit cards, i thought that these were great so that i could shop somewhere and not have to have cash on me, but that's how a LOT of folks get into trouble. my fiance has a Macy's card and because he made 2 payments 1 day late each, they dropped his limit to like $150 and you can't buy anything with that, and now his balance is over the limit so he gets fees on top of that. it's just not a fair situation. i hate when people try to pitch those cards to me all the time. i don't believe in using any credit cards because if i can't pay for it now, then i should NOT be buying it.
syako syako 7 years
I've only had two store credit cards. One was a best buy one since they had a 24 month no interest deal when I bought my laptop. the other was the limited, which was a huge mistake and I've since closed it. I really don't think it's worth it (meaning the 10% discount) when you think about how easy it is to forget paying the bill since it's not usually a regular bill.
bigestivediscuit bigestivediscuit 7 years
Duh! I once worked at a department store that has now folded and we had to push these cards onto people who could NOT afford them ... if we didn't, we'd run the risk of losing our jobs. It was so depressing. I hate working anywhere where you are forced to push people to spend more than they can afford.
RosaDilia RosaDilia 7 years
Thank goodness I've since paid off all of my department store credit cards. I only use my Visa for all credit purchases and then pay it off at the end of the month. Just last weekend I was shopping at Macy's and the salesperson kept insisting that I use my card to save an additional 20% on top of the already 15% the item had off. I kindly told her that I rather pay cash.
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