Store-Only Credit Cards: The Past Remains Present

The first large-scale offering of consumer credit was by retailers that needed to extend credit to their customers so they could pay for goods over time. Post-World War II America experienced an explosive growth in new single-family housing and those households needed refrigerators, washing machines, and vacuum cleaners.

Americans could afford those purchases, but not all at once out of their next paycheck. They needed access to credit so they could pay for those big ticket items over time, just like they made payments on their homes and their cars.

Extending credit for white goods purchases was so successful that retailers began extending credit to their best shoppers and issuing store cards to them as they realized shoppers spent more when they didn’t pay in full for a purchase at the time of the sale.

Carrying a billfold with a department store card told everyone who you were because they could see where you shopped. And those cards told everyone that retailers valued you as a customer. With prestige department store credit cards, the patina of luxury and esteem was symbiotic and flattered both the retailer and its shoppers.

Through much of the 20th century, these cards were the most widely used form of credit, and they were issued by, managed by, and negotiable only at the retailer whose name graced the front of the card.

Currently, as reported in Packaged Facts’ Private Label Credit Cards in the U.S., 55% of adults have private-label (store-only) credit cards, with 44% (or 80% of overall consumer credit cardholders) having used them in the last 30 days. The most widely held private-label credit cards by retailer type—with each of these card types attracting roughly half of private-label cardholders overall—are department stores (28% of adults), discount stores (27%), and club stores (25%), followed by clothing stores or pure-play Internet stores such as Amazon.

For more information, see the newly published report Private Label Credit Cards in the U.S., 12^th Edition, which includes retail credit card program features and benefits analysis, retail card strategies, and growth trends.