Target card or Target Visa? Which is better?
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Share the risk
HSBC issues the Best Buy card, among others. GE Money is the issuer
of a number of co-branded cards, including the eBay and Gap Visa
cards and a Dillard's American Express card. Chase Card Services
is another major player, with a list of private-label and co-branded
cards that includes Starbucks and Herbalife.
For
the retailers, the upside of having a large credit card issuer as
a partner is to share the financial risk.
On the other hand, Target and Nordstrom issue their own co-branded and private-label cards through their subsidiary banks.
"Over the years, most merchants have gotten away from direct issuing either private-label or co-branded cards," says Ken Paterson of Mercator Advisory Group.
In any case, there are generally some key differences between the two types of programs. For one, it's easier to qualify for a private-label card because of the control the store has and because the credit limits are typically much lower than on a co-branded card.
"Also, the credit underwriting standards for co-branded cards like the Target Visa card are going to be different because the customer can use it in so many places besides Target," Paterson says. "So they need to be more careful in their underwriting."
Check the APR
Of course, you'll usually find a higher APR on a private-label card than on a co-branded card from the same store. The Target credit card, for instance, comes with a 24.24 percent APR. The APR on a Target Visa credit card, on the other hand, will depend on your credit rating. It starts as low as 13.24 percent and tops out at 22.24 percent.
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Store card or co-branded card? |
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| Questions to ask before you sign
up: |
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What is the APR? |
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What is the credit limit? |
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Is there a reward program? |
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Can you manage the account online? |
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Does the card have zero-liability protection? |
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In any event, the APR will always be lower than the private-label
card.
"Co-branded card customers probably look more closely
at what rate they're getting than they do on a private label card,
especially if they know that their credit is good," Keane says.
"They're not going to take a rate that isn't good." Well,
they might -- if the rewards are good enough.
Which card you choose ultimately depends on your shopping
habits.
"Some women -- I can say this -- like to compartmentalize
their spending," says Keane. "There are people who like
to keep their gas purchases on their gas card or their clothes buys
on their Dillard's card, because they want to compartmentalize what
they spend, and they want to be able to spend whatever they want
and not have anyone (read 'their spouse') question their purchases."
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