In recent months, consumers who make purchases at major retailers might have noticed that they’re being asked to open store-branded credit card accounts more often. Now, it’s likely that this will happen with even greater frequency.
Citi will soon rename its private-label credit card business and work with retailers to expand and strengthen its lending offerings, the company announced recently. Not only will the business, currently known as Retail Partner Cards but soon to be dubbed Citi Retail Services, continue working with current clients, with many of which it has recently renewed contracts, but it will also attempt to reach new ones.
In addition, it will try to expand not only the amount of companies it works with, but the services it provides to both them and the consumers who open these branded credit card accounts, the report said. This includes building more significant loyalty programs that reward consumers for repeated spending.
“As a result of multiple partnership renewals, a strengthened and expanded leadership team and successful repositioning, the business is poised for profitable growth in the years ahead,” said Citi Retail Services chief executive officer Bill Johnson. “This is the right time to unveil a new name that affirms our renewed focus, structure, capabilities and commitment to aggressively build profitable relationships with new and existing partners. Our current relationships, some of the longest standing in the industry, provide us with an unequaled foundation for growth and success.”
The company’s most recent win was adding Ford Motor Company to its stable of partners, the report said. Now, it will offer consumer financing for parts and service at more than 3,000 dealerships within the U.S. Currently, Citi Retail Services has about 90 million accounts co-branded with a number of well-known brands, including the Home Depot, Macy’s, Sears, Shell and ExxonMobil.
However, these cards may not be for every consumer. For one thing, experts warn that opening these accounts can have a temporary negative effect on a consumer’s credit rating, since it shortens the average length of time they’ve had all their accounts open, as well as counts as a hard inquiry into their credit history. In addition, these cards also come with interest rates far higher than those for non-branded credit cards, which can make purchases more difficult to afford even despite whatever deals these accounts may provide to cardholders.