Store cards in good times are a good source of profit with their exceptionally high interest rates but in down times they can be an anchor around profits.
Not only are store cards generally easier to acquire by people with lesser credit but they are often the first to go unpaid when there isn’t enough money to spread around.
Target Chief Financial Officer Douglas Scovanner, on a recent conference call, said credit cards are the company’s “second-largest challenge.”
In the past year, the net charge-off rate on retail cards has jumped 2.4 percentage points to 8.1 percent. The charge-off rate on general-purpose cards has risen only 1.7 percentage points to 6.08 percent, according to industry newsletter Nilson Report. [Read More]
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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