Credit Keeps Getting Easier
Consumer credit is a sort of self-fulfilling prophecy. As more consumers
use it, more merchants need to accept it. And, as more merchants accept it,
more consumers use it.
That’s why it seems as if everybody wants to offer you credit these
days. If you shop at a department store and you pay with cash or by check,
many employees have been trained to ask you to open up one of the store’s
own charge accounts.
Even relatively small businesses can offer a private-label credit card
to their customers. That’s because credit card companies offer specialized
programs through a variety of trade associations.
For instance, members of SEMA (the Specialty Equipment Market Association)
are all eligible to participate in CarCareONE, a private-label credit-card
program from GE Retail Sales Finance. So, manufacturers, distributors, retailers
and installers can offer their customers instant, on-the-spot credit, as well
as 90-day “same-as-cash financing.”
Why do they? According to SEMA, “Many companies find that consumers
with CarCareONE credit cards will make larger purchases and are more loyal
than customers without the card.”
As the name suggests, CarCareONE credit cards are automobile-focused. But
private-label programs extend far beyond the automotive world. Citi Commerce
Services (CCS) helps all kinds of businesses develop customized retail credit
card program. In fact, CCS has made it possible for retailers in a wide range
of industries to offer a store-specific credit card. These industries include:
- travel;
- jewelry;
- apparel;
- catalog sales;
- furniture;
- automotive;
- office products;
- home improvement;
- consumer electronics; and
- computers.
These are the credit programs for merchants. On the consumer side, credit
card companies market their products even more aggressively. The best example
of this: So-called “affinity” cards. These are general-purpose
credit cards that are associated with a particular airline or auto maker or
membership group. These cards—usually Visa or MasterCard, but with that
fact downplayed—generate benefits based on how many dollars the holder
spends. The benefits are specific to the group; such as frequent flier miles
with an airline card, contributions with a political affinity card or discounts
on car purchases with an auto maker card.
There are the affinity cards that you can sign up for in order to get zero
interest for several months on a major purchase—such as the Visa cards
offered by Circuit City and other consumer electronics retailers in order
to get you to spring for that $3,000 home entertainment system.
There are traps and fine-print conditions to all of these benefits, as we’ll
see later. But the fact remains that credit cards are a booming part of the
economy.
Next: A Creeping Affect |
