Big changes ahead in store-card market
General Electric Company (GE) is getting ready to divest itself of one of its larger divisions, the one that issues private-label credit cards (store cards), according to recent reports by The Wall Street Journal and other media outlets. An official announcement from GE has yet to surface. Given the regulatory restraints surrounding banking, insiders think that floating the division as a separate company through an initial public offering is the most likely route forward.
Depending on how the divestment plays out, some 55 million Americans who hold GE-issued private label credit cards could be impacted. In July, GE said that the division provided consumer finance for 200,000 small and medium-sized businesses, and a number of big retailers. The Wall Street Journal suggests the latter includes Walmart, Gap and Banana Republic.
Small risk for holders of store credit cards
Whether the division is ultimately sold or spun off, its new owners are likely to wish to disrupt the lives of its customers and client retailers as little as possible, certainly in the short term. The impact could be as small as a single letter advising customers of the change of ownership.
However, some cardholders might wish to take this as an opportunity to review the value of store cards in their wallet. Earlier this year, IndexCreditCards.com explored the huge superiority of mainstream credit cards have over store cards for nearly all consumers.
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