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Credit Card Applications » News » Other » Retailers Coming To Terms With Credit Card Reforms

Retailers Coming To Terms With Credit Card Reforms

May 07, 2010 | Updated on May 07, 2010
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The content is accurate at the time of publication and is subject to change.

It is not a surprise the consumers and lenders are equally taken aback by the Credit Card Accountability, Responsibility and Disclosure Act of 2009. Not many retailers took into consideration the impact of this Act until it hit them on their face. In an effort to curtail credit card abuse, the companies that issue credit cards implemented new fees and increase their interest rates. In retaliation to this move, many American consumers starting curtailing the purchases made using their cards. It is a known fact that a lot of customers do use their credit card to pay for medical expenses and food; however, it is the retail purchases that top their list of spending using these cards.

The impact of these new changes in the credit card industry has still not been completely felt. It impact is now beginning to show up since the consumer's spending habits are showing a considerable change. Another reason for the retailers not to have felt the impact till date is that fact that they have been busy trying to fight out the increase in the interchangeable fees. In the process, the retailers have lost a considerable amount of their profits.

To add to their woes, there are a few retailers who suffered a double blow. The ones who suffered a double impact were the ones that offer credit cards of their own in addition to branded credit cards. Signet Jewelers and Nordstorm are two in the list of innumerable companies that experienced a double set back. In addition to getting a percentage from the brand that issues credit cards used for purchasing retailer goods, these companies also made money from the fees and interest collected on the cards that they issued. For a large number of retailers who fall under this category, over 50% of the total sales is through the credit cards segment. Their overall loss was compounded by many factors including reduced sales, reduced spending, income from fee and fall of interest.

The retailers also benefited from the data of the spending habits of consumers that they were able to figure out based on the credit card transactions. The new act has not only led to the loss of sales, but also loss of data which is very crucial for the retailers to develop their marketing strategies. A large number of retailers have expressed grave concerns about the introduction of the new laws. Many retailers are now considering re-negotiating the terms of the contract with credit card companies before renewing their contracts.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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