“Would you like to apply for a store credit card and save 10%?”
There have been countless occasions that you are out shopping and as you are checking out, the cashier will ask the above question. You are in the middle of that shopping euphoric state of mind. We know it happens especially when you have paid all of your bills, and you are paying yourself. It is a standard practice in retail to ask the question when you buy anything that totals up to around $100 or more (stores have different price points). In fact if you have worked retail or are currently working retail, you already know that you must ask it.
We thought you would be interested to know that store credit cards (aka private label credit cards) are a $100 billion industry which includes retail cards, third party cards, travel cards, gas cards, and a few others. Interestingly, very few of the retailers run their own programs anymore. Most are run by third party banks and processors and interest rates are typically much higher than credit cards (averaging in the 20-25% range).
Hey, we like a good deal as well as anyone else, but one of the reasons we started Lending Club was to make it easy to repay your debt. That is why we automatically debit each monthly payment from your bank account. The challenge with retail cards is that it is another bill that you have to remember to pay. You might not even recognize the envelope when it is received so it might go into junk mail.
Lending Club believes that if you went in there shopping to reward yourself with something new, and you have the money, you should spend that money on your purchases. The mind will play tricks on you when you are on that shopping “high”, so just remember – 22.9% to 24.9% interest – that should alleviate any urge to save “10%”.