Thursday, April 25, 2024
Working in retail teaches that charge accounts are a key way the retail industry makes money. Retailers that issue their own cards establish a special relationship with cardholders. A store’s unique card increases sales, ensures customer loyalty and repeat business, earns interest income, and provides data and customer insights. Stores also may partner with banks to provide credit card services and share monetary rewards.
For customers, it’s convenience. Almost magically, they shop without needing cash or a debit card. Many stores also offer rewards programs tied to their charge cards. Customers receive points or cash back for purchases. Incentivizing customers to return and use a store’s card ensures repeat business.
Charge accounts also provide a retailer with valuable data on customers’ spending habits and preferences. This helps the store create targeted marketing campaigns and personalized promotions and develop new products better suited to its customer base.
My part-time job in retail has made me a witness to all those elements. I’m impressed by how efficiently the retailer I work for captures everything associated to its credit business. My job also makes me aware of a very negative side to the business of easy credit and rewards for customers with charge accounts.
Customers with credit cards often say they purchase too much. Many such shoppers soon learn that store cards’ interest rates are high and that late fees accumulate quickly. These days, shoppers often explain that they have opened credit cards previously and ultimately found they couldn’t pay off monthly card balances. After accumulating great debt by using a card and finally managing to struggle from under the burden, these shoppers are adamantly opposed to opening another charge card.
Dear Friends: All this argues for a greater focus on managing our assets skillfully. Diana
Diana's Morning Blog 