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Macy’s Credit Card Dark Little Secret

January 7th, 2008 · No Comments

As mentioned in Living Without Credit Cards my wife and I are currently not in agreement yet about canceling all of our credit cards. Recently, she opened up a Macy’s department store card for the initial 10% off her first purchase. We used to do this so often in the 90s when we bought our first house that the mortgage loan officer even asked us why we had opened and closed a half-dozen credit cards in the last several years. We told him it was for the quick-hit 10% or more discount on the first use of the card. We don’t do that anymore…or at least I thought we didn’t.

So we get the first (and will be the last) bill from Macy’s and it comes in two separate envelopes. So I think this is odd. Then I noticed something terrible. This card not only allows purchases in Macy’s stores like all department store cards, but is also functions as a full-fledged Visa (or in some cases Mastercard). My wife could probably recite the exact choice words I elicited from the dining room when I discovered this. Apparently this is a joint effort between Macy’s and Citibank. Others have reacted the same way I did when discovering this fact:

From Joe’s Journal:

Well, this summer Macy’s announced their plan to “flip” 3.5 million dormant store charge accounts to new Citibank MasterCard accounts. Apparently, this is legal under the fine print of the original Hecht’s and Macy’s store charge card agreements, though the agreements refer to this activity as “information sharing” between the store and the bank, rather than something more obvious like “giving you a seemingly unrelated all-purpose credit card many years from now when you least expect it.”

From a finance blog at the Washington Post a reader submits his similar story:

Looking for savings, Marc naturally took advantage of such an offer from Macy’s. But a few weeks later, he was surprised when he received a store-branded Visa card–not a private-label card that could only be used at the store–with a $10,000 line of credit. Since he had more credit cards than he needed, including one from Visa, he called to cancel and get what he wanted in the first place–a more limited store card.

Macy’s said it makes it clear in the credit application that the store will first consider you for a Macy’s Visa card and that’s what you’ll get unless you don’t qualify for it or you opt out at the cash register when you sign up for the card. But the credit card application is so full of fine print that you may not spot that caveat even if it is in bold capitalized letters. And in the haste to sign up for the discount, you also may not realize that you have a choice of a Macy’s Visa card or a more limited store card.

Does this sound sleazy? Does it sound like Citibank does not care about you? Well, hello!! They don’t. Keep in mind that most big-box retailers are doing everything in their power to make it easier to spend more money. A credit card does just that. Why limit your purchases to just Macy’s? Why not give everyone another card to add to the pile of potential consumer debt. Sears did this so well in the 80s with the Discover card that they ended up spinning off the whole division into another company.

The bottom line: getting the “added convenience” of your Macy’s card being a credit card also is neither convenient, nor a wise move.

Tags: Credit Cards · Money

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