The retail credit servide is the credit granted by a firm to consumers for the purchase of goods or services. Retail credit can be granted either through outside credit cards such as Visa, MasterCard, and American Express or through retailer-generated credit cards. In-house credit cards encourage store loyalty.
- A retail credit line generally is a credit card for use at one particular store. The store grants you special perks for using the credit card to make purchases. The credit card issuer often is one of the major credit card companies acting on behalf of the retailer, not the retailer itself. Much like any other credit card that offers rewards, specific purchase rules often apply. Some examples of purchasing rules are specific dates when you are allowed to use the credit card for discounted goods, a brief introductory discount followed by a smaller discount later, and blackout dates when rewards cannot be used.
Use of Retail Credit
- In the United States, stores like J.C. Penny Co., Kohl's, eBay and Amazon are examples of businesses that use retail credit to promote consumer loyalty. Stores often offer you a large discount if you apply for the credit card more discounts later. By having its own credit card, the retailer avoids paying fees on other credit cards. One popular reward for signing up for store card is the offer of "no payments and no interest" for a specified time. While this might appeal to you, you should also take note that after the promotional period, a high interest rate might go into effect. Retail credit is usually for consumers, but businesses can also use these credit lines.
Retail credit facilities can take the form of point of sale finance options in retail outlets. For example a $10,000 motorcycle might be a lot for a consumer to pay up front. Retail credit facilities will loan the $10,000 to the consumer, who will then pay it back with interest in monthly instalments over several years. Some offer low or even no payments over an initial time period, but then charge above average interest.
Retail credit facilities give the option of consuming now or consuming in the future. Higher interest rates may be acceptable to some consumers, depending on the consumers' unique consumption utilities. The risk of default is a factor that determines the interest rate that retail credit facilities charge.
Retail credit facilities give the option of consuming now or consuming in the future. Higher interest rates may be acceptable to some consumers, depending on the consumers' unique consumption utilities. The risk of default is a factor that determines the interest rate that retail credit facilities charge.
