Look out American Express, Chase and MBNA, here comes Target.
Through its Target National Bank division, the retailer has issued credit cards to more than 16 million customers — going where no retailer has gone before — onto the top 10 list of the nation’s largest credit card issuers.
No wonder Wal-Mart and Home Depot want to enter the banking business. No retailer has ever ranked so high on the credit card list, and no other appears to be close either. The next closest retailer on the list, Nordstrom, ranks 27th.
Issuing 16 million credit cards has been a money-making prospect. Target has capitalized on the concept by charging up to 23.74 percent interest – a strategy that’s generated about $5.6 billion.
No doubt that’s the kind of success Wal-Mart and Home Depot want to duplicate.
Home Depot has announced plans to purchase Utah-based EnerBank, but the news has been met with criticism, just as it was when Wal-Mart made known its intention to open a bank.
Critics allege that Home Depot would gain an unfair competitive advantage if it could offer both home-improvement loans and equipment to customers, and that if Wal-Mart opened a bank, it would drive small community banks out of business.
If Home Depot and Wal-Mart eventually open banks that offer their own credit cards, they’ll have Target’s marketing example to follow.
Analysts attribute Target’s credit card success to its aggressive pitch to shoppers. Employees continually ask customers if they are interested in a Target line of credit and are quick to remind them that it will save them 10 percent on purchases made that day.
Also, cardholders can take advantage of a10 percent-off day after every tenth drug prescription. And, cardholders can rack up points by using their card and earn another 10 percent-off day for every 1,000 points.
Wells Fargo has created a program to improve the credit of customers who don’t qualify for prime interest rates on mortgages.
Steps to Success will offer lessons about budgeting and building credit.
Introduction of the program comes at a time when Wells Fargo is accused of using predatory lending practices and not repaying alleged victims of lending abuses.
Wells Fargo representatives said the program was not created in response to the accusations and that the bank simply wants to reach a wider base of sub-prime customers.
About 11 percent Wells Fargo’s $392 billion in mortgage loans last year were considered sub-prime, according to the trade publication Inside Mortgage Finance.
Steps to Success also will offer a program that monitors credit reports.
The U.S. Treasury Department has launched a campaign aimed at convincing people to file federal tax information online.
Simplify touts the ease and convenience of paying tax bills via the Internet.
But, state and federal tax collectors are making the push to move to a paperless tax system not simply because it is convenient for taxpayers, but also because it saves taxing agencies a lot of money – hundreds of thousands of dollars spent on paper, postage and disposal.
Simplify’s most recent media blitz seeks to persuade business owners to send their Form 941 electronically. Form 941 is used by employers to report wages and other compensation, income and Social Security tax withholdings to the IRS.
The 941 deadline is July 31.
The Treasury Department also wants to remind taxpayers that electronic filings and payments can be made 24-hours a day.
For more info, visit www.simplify.org.
Eleven U.S. Bank in-store branch employees in Colorado have won U.S. Bank’s Annual Pinnacle award for 2005, and four of them were from Colorado Springs.
The Pinnacle award is given to U.S. Bank employees who perform in the top 10 percent of their line of business.
Colorado Springs winners include:
It appears that banks are learning how to cash in on any kind of publicity in order to put their name on the minds of consumers.
This summer, UMB bank is promoting – not a rewards program or free checking, or even branch or ATM location convenience — but instead it’s promoting its “My Ugly Room” contest.
That’s right, all the neglect you’ve been giving that old, ugly room in your house might finally pay off.
Residents in Arizona, Colorado, Illinois, Kansas, Missouri, Nebraska and Oklahoma can log on to www.myuglyroom.com and send in a photo by Aug. 31of their disastrous den or chaotic kitchen for a chance to win a $10,000 Visa gift card for a makeover.
Pictures and descriptions of entries will be posted on the site where participants can vote for the ugliest room each week.
Who needs another free checking offer anyway?
Rob Larimer covers banking and finance for the Colorado Springs Business Journal.