What is a Private Label Credit Card and How is it Beneficial?

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  | Published: 06 August 2020 | Last Updated On: 28 December 2020

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Well, many of us might be familiar with the 4 major credit card labels that are issued all across the globe – Visa, MasterCard, American Express, and Label. All of these cards fall under the general-purpose category and can be basically used at any place where there is the spending of money required, except obviously those merchants that do not accept any non-cash payments.

However, there are many companies that choose to issue their own credit cards instead of accepting any of the major labels’ credit cards. Such credit cards are known as the private label credit cards, and these can be only used at the specific store that issues them. Such a card is branded for that particular retailer, independent dealer, or manufacture. There are many teams, manufacturers, non-profit organizations, and websites that offer their own cards.

While some credit cards are managed by the retailers by themselves, others are managed by third parties instead. In such a case, the third party collects the payment from the credit cardholders. Further in this thread is a description of how private label credit cards work and how a cardholder can benefit from them. So, read on!

Why Do Companies Have Private Label Credit Cards?

There are many reasons why a company issues its own credit card. One of these reasons is that it increases sales by providing their customers with an alternative mode of shopping with the company. More importantly, the private label credit cards are the most cost-effective kind of payment that the retail companies can accept. The reason behind this is that the tasks that would be repetitive otherwise are now automated.

Private label cards have also proved to have an effect that is much deeper and lasting on the loyalty of customers. Just the presence of a card that has a logo of a prominent brand or company in one’s wallet causes an emotional impact and kind of forms a bond with the company, mainly because of such cards’ exclusivity.

Company cardholders not only buy more things at the store that issue them such cards as compared to the non-holders, but they also tend to buy more expensive items. On top of this, those who might be having comparatively tighter financial conditions tend to pay back the private card dues ahead of the others because of the sense of customer loyalty.

What is the Procedure?

The larger organizations tend to both issue and manage the credit cards all by themselves, whereas the smaller ones, as mentioned previously, tend to sign up some sort of agreement with a bank, which then sets a line of credit with their customers and determines the requirements for the applicants.

Benefits of Private Label Credit Card Programs

Below are some of the benefits of the private label credit card programs offered by various companies are as follows:

Before You Go Ahead and Apply For a Private Label Credit Card, It is Important to Understand its Meaning

Some of the private label credit cards give the eligible customers the alternative to finance their expenditures or provide them with special perks and benefits for being a loyal shopper to the company. Such a credit card can only be used to purchase products at the retail stores of that particular brand.

Private Credit Cards Can Help in Strengthening Your Credit Profile 

It is important to be sure that you responsibly use your private label credit cards. You must ensure to clear the outstanding dues on time in order to keep your card account in good standing. The banks that service any such private label credit card programs directly report to the credit bureaus. This means that if you keep your card account in good standing, they can make use of your private credit cards to help and strengthen your credit score.

Find Out If Your Retailer Provides Special Financing

For those cardmembers that qualify for such cards, special financing might be offered by the retailers. Make sure you go through the credit card agreement for any further details and to be well aware of the various terms and interest rates, along with any other fees and charges that might be applicable.

Take Advantage of the Brand Benefits

A private label credit card tends to offer brand-specific rewards as opposed to a general-purpose credit card. The regular loyal shoppers can earn various exclusive rewards and some special offers, which might lead to significant saving opportunities.

To Further Conclude

When it comes to shopping the consumers have numerous payment alternatives to choose from – be it traditional cash, digital wallet payments, general-purpose credit cards, or private label credit cards. Private label credit cards can be used at a particular retailer and give the customer an opportunity that might come with numerous exclusive perks – from earning rewards to availing attractive offers.