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Sears changing credit cards
Saturday, September 02, 2000 By Patricia Sabatini, Post-Gazette Staff Writer
The next time you're sifting through all those credit card offers crammed in your mailbox, don't be surprised to find one from Sears Roebuck for a MasterCard.
In a bid to compete on a national basis with big bank card issuers, the giant retailer is offering its cardholders a general-purpose MasterCard to replace their private-label Sears cards.
By the end of the year, the company expects to begin mass mailings to households outside its customer base, including Pittsburgh.
By switching to the MasterCard brand, customers get a card good at thousands of businesses instead of just Sears stores. They'll also get some extra benefits, such as discounts on purchases at Sears and announcements of special sales.
"It's sort of the best of both worlds," said Ted McDougal, public relations director at Sears.
In June, about 5 million of Sears' 63 million cardholders were asked to switch to MasterCards. Some are receiving the new cards without asking. About 20 million more customers will get the solicitations in coming weeks.
Sears' move reflects the pressures in the private-label card industry.
Overall, the business has been waning for decades. People just don't like having their wallets stuffed with a bunch of credit cards good only at one store, or getting separate bills for each one every month.
A few national retailers -- such as Nordstrom and Federated Department Stores, owner of Lazarus, Bloomingdale's and Macy's -- have responded in recent years by offering Visa or MasterCards.
But Sears, by far the largest issuer of private-label cards, is considered the only one with enough clout to challenge the big bank card issuers, such as Citigroup, MBNA and Bank One's First USA division.
Although Sears' card operations have been quite profitable, they've been flat the last year to 18 months.
Currently, about 24 million accounts are inactive or don't carry a balance from month to month, McDougal said. In other words, Sears isn't making money on them.
The company decided to determine the problem and try to fix it.
It chose the MasterCard route after a survey showed customers wanted to reduce the cards they carry. They also thought the interest rate on the Sears card was too high.
The interest rate on the new Sears MasterCard will vary depending on the customer's credit history.
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