Target announced today that they are not going to offer their Visa card as of April 29th. Instead, all new accounts will be their store cards only. (Here's the story where I found it at the BBB.)
They're saying they have made this decision because it's good for their retail business; the store card is only valid at Target, while the Target Visa could be used anywhere. According to Target's press release, surveys have told them that customers spend more in the store using their Target card than their Target Visa.
A couple of reactions to this:
• Target's Visa was the one "consumer-friendly" credit card that was widely obtainable. The other 9 on the list were from regional banks with very strict application requirements. By my reckoning, their Visa card stopped being consumer-friendly a couple of years ago when a pump-and-dump scam artist an "activist investor" bought a bunch of their stock and forced them to sell about half of their credit card business to Chase. The Target store card may go back on the "consumer-friendly" list if it's administered solely by Target.
• Target was the largest retailer to have its own bank, "Target National Bank," allowing it to issue its own credit. Until they were goaded into selling half their portfolio, they reaped all of the profit from their credit card interest, fees, and etc. A few years ago, Wal-Mart tried to start its own bank and was greeted with conniptions from politicians who were already in the pocket of existing banks and unions. No one ever explained to my satisfaction why what was good for Target wasn't good for Wal-Mart. (And according to today's story at Insurance Day, Wal-Mart is still very interested in entering the banking business, even as Target seems to be stepping away from it.)
• Yes, I could use my Target Visa card anywhere, including Target's competitors. But if I did, that competitor was forced to pay service fees to Target National Bank. So Target Financial Services made money off of the Visa card no matter where it was used. That revenue stream will start going away when this switch happens.
• The fact that Target is making this move soon after the Credit CARD Act went into effect is probably not a coincidence. While the new law was intended to help consumers, it has probably hurt them here, by driving Target away from the business and decreasing consumer choices when it comes to credit cards.
• Defaults on credit cards are another likely reason for this move, which suggests we're still deep in the woods with the financial crisis.