Why Brands Are Launching Their Own Credit Cards (And 10 To Check Out)
The highly competitive world of retail means businesses need to find ways to retain customers. Launching a credit card gives a brand the ability to distribute member points for purchases everywhere, offer higher perks for in-store purchases, and keep the company’s name front and center. mindset of consumers.
Is it worth the time and effort it takes to cast a map? As digitalization accelerates beyond anyone’s expectations, finding ways to appeal to modern consumers can prevent smaller brands from being eclipsed by online retailers.
According to McKinsey, the COVID-19 crisis accelerated digital products by seven years. Businesses reacted and acted 20 to 25 times faster than they thought possible to adapt to the rapid changes. This means competitors may already have systems in place to attract the target audience.
Why do retailers set up their own credit cards for their stores?
Credit can benefit the store, providing an additional percentage on purchases when the consumer spreads payments over several months. Why should an outside party get 2.6% or more, when the store can grab those profits instead?
Companies can also offer bonuses and set up loyalty programs via a card. A first purchase discount is an attractive offer for most people. It could also help them move forward with the impulse purchase they would otherwise be waiting for.
Retail business owners know a customer who says they’ll think about it and come back will probably forget about the store and the products the second they leave. “Out of sight, out of mind” applies to physical stores.
People fresh out of school may want to build credit, but may not yet qualify for major brand cards. Small store credit cards are traditionally easier to obtain. There is approximately $1.47 trillion in student loan debt in the United States. Millennials and Gen Z may feel more comfortable starting out with a small line of credit card from their favorite retailer before getting more lines of credit. Use a card to attract these consumers and build brand loyalty before they go elsewhere.
Tips for starting a credit card
Don’t worry about the costs of starting a credit card. Businesses can partner with major credit card companies, such as MasterCard and Visa, for a branded card. Co-branded cards add the support of a large company to the card, but give the retailer the advantage of adding loyalty programs and perks.
Pay close attention to all terms and conditions of the partnership. Choose a respected company that the brand and its users can adopt. Read all the fine print to avoid finding yourself in a difficult situation.
Learn From These Branded Credit Card Examples
1. CAT Card
The new CAT card is an excellent example of customer benefits. Buying parts, renting equipment, and servicing large machines all add up. Businesses sometimes suffer from cash flow issues, and a credit card with net 30 terms or the ability to spread out payments can help small builders and excavators get through lean times. An added benefit is the rewards users receive for using the card.
The card matches the brand’s color palette with a black background and gold accent. It has a distinctive look that customers will instantly recognize.
For brands selling essentials and consumables, a credit card is a no-brainer. Customers can set orders on autopilot and even earn money for future purchases. Part of the changes of COVID-19 is that more people are ordering their groceries online and picking them up curbside or having them delivered.
The Wall Street Journal reports that the cards will arrive next year and offer 5% cash back on Instacart purchases. There are rumors that DoorDash will offer a similar deal with discounts at area restaurants.
3. General Engines
General Motors has partnered with Goldman Sachs to offer a co-branded rewards card program. The idea behind their branding program is to earn points for future purchases. Their customers can manage their borrowing needs while getting discounts on something they would buy anyway.
When people think of a branded credit card, a local pharmacy might not be their first thought. However, a credit card pairs perfectly with the customer loyalty program that Walgreens already has in place.
The myWalgreens credit card features the MasterCard logo. Customers earn $25 in Walgreens cash just for signing up. After that, customers earn 10% cash rewards on branded purchases and 5% on other items purchased from the store. They can also earn rewards for being healthy.
Verizon timed with Synchrony Bank to offer its first consumer credit card. Entering the financial sphere helps the company to diversify its holdings but also offers advantages to users. The product has no annual fee and 4% back on gas and groceries.
Cash back goes towards Verizon products and services, such as a phone bill or the purchase of new devices. Recently, Verizon announced that it would partner up and allow cardholders to redeem rewards for flights, hotels, car rentals, and certain gift cards.
6. Cato Fashions
Shoppers at the retail clothing store will appreciate the opportunity to get a Cato credit card and start earning benefits. Benefits include no annual fees and no interest if users pay the balance before the next billing date. The card is issued by Cedar Hill National Bank. Allowing people to shop with a store credit card means they can buy their entire wardrobe for the season while they’re there.
Although more of a store credit account, Fingerhut is a great example of how a mail order business uses credit to encourage customers to purchase gifts and larger items through the through their service.
For those who are just building credit, Fingerhut can be a good option, as they have a 90% approval rate upon verification. Clients can apply through their site and get a decision in minutes. They offer low monthly payments and a chance to build a credit history.
For those with bad credit or no credit history, Fingerhut is a good option. After three on-time payments, they often increase the credit limit. They also report on-time payments to credit bureaus, which can help improve credit scores quickly.
8. West Elm
The West Elm Store Card taps into their Key Rewards program and works with a range of their stores including Pottery Barn, Williams Sonoma, West Elm and Mark & Graham. Card members get 5% back every time they shop at their seven brands. Alternatively, customers can choose a 12 month financing option.
Be the first to know about new arrivals and special promotional offers. By offering perks, like an exclusive newsletter, they encourage their customers to shop within their brands instead of pick and choose.
9. Amazon Prime Rewards Visa
E-commerce store owners should pay close attention to Amazon Prime’s credit card rewards program. The brand offers 5% cash back on branded purchases, 2% at restaurants, gas stations and pharmacies, and 1% on all other purchases. There is no annual fee and cardholders can use it anywhere Visa or MasterCard is accepted.
Those who already have a Prime membership may find the card a good option. However, if one has to pay the Prime annual fee, it’s not good value with other options out there.
Amazon offers card sign-up incentives such as account credit or discount. The offer varies, but can save users a lot of money on major purchases. While promotions cost Amazon upfront, users then continue with the card, earning Amazon additional fees and interest charges over time. This type of credit card offer is more of a long-term financial investment, where the business owner expects the card to pay off later.
10. Lowe’s Advantage Card
Lowe’s offers a credit card that helps people make big purchases to improve their homes. Some of their card perks include no annual fee, 5% off all qualifying Lowe’s purchases, or promotional financing (variable). The card can only be used at Lowe’s and will accrue deferred interest if the borrower does not repay the balance at the end of the promotional period.
They frequently offer perks such as 20% off up to $100 on the first purchase after opening the account. The special promotional period is often six months. They may offer special finance payments or long promotional periods for purchases such as appliances or heating and air conditioning.
Launch of a branded credit card
The benefits of launching a credit card for a business far outweigh the learning curve. With so many major credit card companies offering co-branding opportunities, there’s really no reason why companies shouldn’t harness the power of offering rewards and building loyalty programs by card.
Customers will likely spend more once they have access to a line of credit. The store will help young customers establish a credit history. Brands like Kohl’s create loyal customers by giving them their first credit card and helping them get started.