Released: July 10, 2006

Retailers want a place in your wallet

Source: By Jayne O'Donnell, USA Today

No interest or payments for a year! 25% off purchase! Free gift cards! The latest lures to open store credit card accounts can certainly be alluring. And there’s no shortage of offers. Determined dealmakers on any given day could enjoy myriad special offers and have wallets full of store cards — ranging from Barnes & Noble to Macy’s to Best Buy — to show for it.

But should they? Even the top lawyer for the National Retail Federation cautions against making too much merry with all the promotional deals for store credit cards.

“It would be a disservice to tell people to load up their wallets,” says Mallory Duncan, NRF’s general counsel and senior vice president. “People should balance their entire card portfolio carefully. Only take cards with genuine value to you as a customer.”

So what’s all the promoting about? Duncan says stores are “looking at all sorts of alternatives to keep down the ever-increasing Visa-MasterCard fees.” Visa and MasterCard charge a fee equal to 2% of every transaction, which will cost retailers up to $26 billion this year, he says. When stores offer cards that are co-branded with Visa or MasterCard, they save some money in fees. When they offer their own cards, they avoid the fees completely.

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