Report Overview
How many shoppers using a PLCC say they use it every time they shop at the card’s retailer?
This report covers the US market for private label credit cards (PLCCs), with an emphasis on card issuers, merchants, consumers and the competitive and economic challenges shaping the industry. There is a review of retail credit card program features, benefits analysis and a review of retail card strategies, and growth trends.
More specifically, the report:
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Provides an analysis of large retailer strategies to innovate and grow market share
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Outlines the going-forward strategies of top private label credit card issuers. Those issuers are Bread Financial, Citi Retail Services, Capital One, Synchrony Financial Services, TD Bank, and Wells Fargo.
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Assesses new PLCC opportunities including medical PLCCs and fuel card PLCC.
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Conducts analysis of seven private label credit card programs from within the context of the retailer’s loyalty program and its results, including Best Buy, TJ Maxx, J.Crew, Kohl’s, Target, Amazon, and WEX.
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Assesses consumer use of private label credit cards segmented by retailer type, including the type of card they use most frequently.
Loans outstanding and purchase value estimates for the US private label credit card market are provided for 2021 to 2023 with industry forecasts out to 2027.
Report Methodology
The information contained in this report was obtained from primary and secondary research. Primary research included an MRI-Simmons Spring 2024 national consumer survey with a sample of 1,500 US adults (age 18+), with the sample in aggregate being census representative on the primary demographic measures of age, gender, geographic region, race/ethnicity, and household income.
Market estimates draw on multiple sources, including:
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company annual and quarterly filings
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earnings and analyst calls and presentations
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FDIC Reports of Condition and Income ("Call Reports”)
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credit card trusts (asset-backed securities backed by credit card loans held by financial institutions)
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Federal Reserve data
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Consumer Financial Protection Bureau
Private Label Credit Card Overview
Consumers who use a retailer’s private label credit card (PLCC) do so to access its roster of benefits. More than regular loyalty program members, store cardholders receive more rewards, exclusive discounts, private shopping days and “spontaneous” bonuses.
More than 87% of shoppers using a PLCC say they use it every time they shop at the card's retailer. A PYMNTS survey found that 42% of shoppers using PLCCs reported doing so because the rewards were greater than those accrued using any other method of payment. The rewards built into PLCC programs build both shopper loyalty and revenue for the retailer.
Retailer Target finds its PLCC users spend five times more than its other customers. At Kohl’s, a discount retailer, 30 million Kohl’s Rewards members spend two times more than its 35 million non-member shoppers. Kohl’s Rewards members who are also cardholders spent six times more than non-member shoppers.
PLCCs are First Step in Building Credit
Consumers are often encouraged to apply for a retail card before they apply for a network-branded, general-purpose credit card. Retail cards have lower credit rating requirements than general purpose cards, much lower credit limits (often in the range of $400) and much higher interest rates to offset any possible card program losses.
Private label credit cards are partner-branded credit cards used by consumers exclusively for the purchase of goods and services from that partner. Credit under a private label credit card typically is extended on standard terms, which means accounts are assessed periodic interest charges using an agreed non-promotional fixed and/or variable interest rate.
Credit may also be extended through a promotional financing offer, involving deferred interest, reduced interest or no interest during a set promotional period (typically between six and 60 months).
In the past, most large retailers issued their own credit cards through their in-house financial services divisions. This made the retailer responsible for risk management, regulatory compliance, credit approvals and past-due debt collection for the credit card account. The plus for the retailer was that it completely controlled every variable in the customer’s experience with its brand and retained all the operating income generated by the card.
As large retailers nationalized their footprints, the in-house management of card portfolios was deemed impossible and the collection of interest on accounts carrying balances forced retailers to charter finance companies and deal with federal supervision.
Today, all multi-state retailers have their store credit cards issued and managed by third party banks and financial services companies.