Consumers who carry a Best Buy store credit card in their wallets will have to swap it out for a new one later this year. Capital One has ended their contract with Best Buy early, and Citi will be the new issuer and manager of Best Buy store-branded credit cards in a deal expected to close in the third quarter of 2013.
Capital One plans to sell their holdings of Best Buy private label and co-branded credit cards to Citi for approximately $7 billion, the company announced this week. They gave no reason for the split with the Richfield, Minnesota-based retailer, but said they do not expect to take a loss on the sale.
It’s no secret that Best Buy has been struggling lately. Former CEO Brian Dunn resigned in April 2012 after just three years on the job, in the midst of a misconduct investigation. While he was CEO, Best Buy’s stock price fell precipitously – from $38.97 in April 2009 to $20.51 in April 2012. Currently, shares are even lower, hovering between $17 and $18 at the time of this posting.
Citi takes charge
Citi already issues cards in partnership with major companiessuch as The Home Depot, Macy’s, Sears, Shell, and ExxonMobil. Between those and other brands, Citi manages almost 90 million retail accounts. Best Buy will be the latest addition to that portfolio.
Citi said in a statement that they expect the Best Buy purchase to “significantly expand” their stance as a market leader. They plan to grow the Best Buy credit card market using theircustomer base and experience managing store card accounts.
Citi holds over 200 million customer accounts in over 160 countries worldwide. Their holdings and services include bank accounts, credit card accounts, investment banking, securities brokerage and wealth management.
