Target: Credit Card Receivable Transfer Sales

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Target: Credit Card Receivable Transfer Sales

You’ve probably heard recently that Target, only one of the most popular and the second largest discount retailers in the United States, confirmed that the corporation is having trouble selling its private-label, retail credit card portfolio.  This led to the official suspension of the credit pool sale as of this month.

You and I have, more or less, a sharp guess as to what brought the corporation to this economic decision.  But up to this point, both observers and cardholders are still stumped about the benefits of the sale of the credit card loans.

Why did you get a store-branded credit card in place of that cash back on your credit card?  You must know that the basic difference of getting a retail credit card – in this case, Target’s – is that you can only use this card for purchases on their stores.  It’s just like carrying a gift card that amounts to, well, your credit limit.  If you’re a frequent Target buyer, then Target’s credit card is definitely a good deal for you.  Especially that Target recently upgraded their retail credit card with a rewards program.

On the other hand, this is largely why a lot people are wondering why Target wants to make the sale.  From a retailer’s point of view, handling a credit card business is not only a new venture but also a pricy undertaking.  Things have been going well fior Target even after Lehman’s collapse in 2008 thanks to the revenue generated from the credit endeavor.  And needless to say, declaring profit after that crisis is short of a miracle for any enterprise.  Plus, the rewards program proves enticing for customers since sales rocketed after its launching.

But the facts are beside the point.  Target is selling the credit card receivables, what’s in it for you?  As a Target credit cardholder, as a direct effect of the sale, you will be dealing with a new creditor.  As for the rewards program, Target will remain in charge.  You won’t be having problems as long as you stick with your written agreements with Target.  The only reason you have to worry is if you don’t pay your charges on time, since you are now subject to terms of a new creditor.  The bottom line is, there is no imminent whether Target keeps the ownership or not, as long as you keep to your part of the deal.

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