Private Label Credit Card

AAA

DEFINITION of 'Private Label Credit Card'

A store-branded credit card that can only be used at that store. A private-label credit card is a type of revolving credit plan managed by a bank or commercial finance company for either retail or wholesale manufacturers, such as department and specialty stores. Private label credit cards do not carry a credit card logo such as Visa or Mastercard and cannot be used with other merchants.

The private label credit program allows retailers to offer more lenient and extended terms to customers than they could otherwise. Many stores offer private label credit cards to their customers to encourage them to spend more by offering the convenience of a credit card and deferred payment. In addition, when a customer makes a purchase with a private label credit card, they will usually earn loyalty rewards, such as a discount on a future purchase. In this way, a private label credit card can encourage repeat business and customer loyalty. Private label cards can also make shopping more convenient for customers through features such as receiptless returns.

INVESTOPEDIA EXPLAINS 'Private Label Credit Card'

If a third party, such as a bank, manages a private-label credit program for a retailer or manufacturer, it will perform several functions. These include the issuance of cards, funding of credit and the collection of payments from customers. The criteria for credit are jointly established by the service provider and the retailer.

Private label credit cards are similar to other credit cards in that they charge interest if you carry a balance, charge a fee if your payment is late and have a grace period if you don’t carry a balance. They are also similar to other credit cards in that while private label credit cards do not carry a payment processor’s logo, they are still backed by a payment processor such as Visa. The payment processor makes it easy for stores to offer private label credit cards by offering cards that work with the store’s existing terminals and point-of-sale equipment.

Target is one of many retailers that offers a private label credit card as of 2014. Called the RedCard, it gives consumers 5% off all purchases at the point of sale, free shipping on all online purchases and an extra 30 days on top of the usual 90-day return window to get a refund for unwanted purchases. Similarly, Nordstrom offers a private label credit card that gives customers $20 off a $100 purchase on the day they apply plus points on each purchase that can be redeemed for future discounts. Target and Nordstrom also each offer Visa cards that offer store-specific benefits and can be used anywhere Visa is accepted.

RELATED TERMS
  1. Visa Card

    A credit, debit or prepaid card branded by Visa, a major payments ...
  2. Green Monday

    The second Monday in December, which is one of the most lucrative ...
  3. Loyalty Program

    A rewards program offered by a company to customers who frequently ...
  4. Manufacturer's Suggested Retail ...

    The amount of money for which the company that produces a product ...
  5. Zero-Floor Limit

    A retail authorization system in which all of a merchant's credit ...
  6. Co-branded Card

    Any credit card that is offered by a credit card company that ...
RELATED FAQS
  1. What is the difference between "closed end credit" and a "line of credit?"

    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
  2. What is the best way to start to rebuild your credit after a bankruptcy?

    Bankruptcies can be devastating to your credit score. Even worse, a bankruptcy will be listed on your credit report for between ... Read Full Answer >>
  3. What were the primary financial crimes involved in the ZZZZ Best case?

    ZZZZ Best was a company started by Barry Jay Minkow that claimed to be a carpet cleaning business. In fact, it was a Ponzi ... Read Full Answer >>
  4. Can a creditor sue me for a delinquent account?

    If a credit card account becomes delinquent, the creditor can sue the debtor for the balance as soon as the delinquency occurs. ... Read Full Answer >>
  5. How do I transfer my credit card history from one country to another?

    It is currently not possible to transfer your credit history to another country if you relocate. The credit metrics used ... Read Full Answer >>
  6. What are some examples of simple interest loans?

    Two good examples of simple interest loans are simple interest car loans and the interest owed on lines of credit such as ... Read Full Answer >>
Related Articles
  1. Credit & Loans

    Review: The Walmart Credit Card

    A high-interest card with no annual fee and some good rewards, the Walmart Credit Card is worth a look, especially if you regularly shop at Walmart.
  2. Credit & Loans

    Review: The VentureOne® Rewards Credit Card

    Capital One's VentureOne® Rewards Credit Card offers travelers no annual fee and a menu of perks.
  3. Credit & Loans

    What You Need To Know About EMV Credit Cards

    Finally, the U.S. is beginning to move to EMV credit cards. Here's how they'll keep us safer and what they won't fix.
  4. Budgeting

    Layaway Plans: Get The Goods Without Going Into Debt

    If using a layaway plan keeps you from having to use your credit card, it could be a smart move.
  5. Credit & Loans

    Do Customer Loyalty Programs Really Save You Money?

    Here is a look at what customers have to do to ensure that loyalty programs help them shop smarter.
  6. Credit & Loans

    Rewards Credit Cards

    If you have a very good credit rating, you will have your choice of rewards credit cards, so pick the one you will be able to use the most.
  7. Retirement

    Understanding Credit Card Interest

    Paying these rates can impact your disposable income and your investment returns.
  8. Credit & Loans

    Store Credit Cards: Do The Incentives Pay Off?

    Check out the pros and cons behind store credit cards; they might actually help you save money.
  9. Entrepreneurship

    2 Key Tactics Retailers Use To Increase Sales

    Many companies use versioning and bundling to increase sales. These strategies can offer value to consumers, but they also mean higher costs.
  10. Credit & Loans

    Ink Plus or Starwood Preferred, Which Credit Card Is Right for You?

    Maximize Your Business Rewards: Chase Ink Plus vs. Starwood Preferred.

You May Also Like

Hot Definitions
  1. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  2. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  3. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  4. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  5. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  6. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!