Private Label Credit Cards Explained: How They Work, Types, and Examples

A private label credit card is a store-branded card designed for use within a particular store’s network. Unlike major credit cards such as Visa or Mastercard, these cards are specific to the issuing retailer and aren’t universally accepted.

Private label credit card programs are managed by third-party financial institutions in collaboration with retailers. These programs involve card issuance, credit funding, and payment collection, and they feature jointly set credit criteria between the financial institution and the retailer.

Similar to conventional credit cards, private label cards impose interest on carried balances, late payment fees, and offer a grace period if the previous balance has been fully paid and on time. Despite lacking major payment network logos, they are backed by payment processors and issuing banks, enabling smooth transactions via the store’s existing terminals and point-of-sale equipment.

Various retailers, including Target with its RedCard and Nordstrom, offer private label credit cards. Target’s RedCard gives consumers a 5% discount on purchases, free shipping for most online orders, and extended return periods. Nordstrom offers a card that grants customers $40 off their next purchase upon immediate card use approval.

In addition to private label cards, some retailers also provide co-branded Visa or Mastercard options. Nordstrom, for instance, offers a co-branded Visa card that bestows store-specific benefits and can be used at any Visa-accepting merchant. While some retailers no longer provide general-use cards, these comprehensive credit cards, suitable for individuals with good credit profiles, offer benefits from the retailer while being accepted widely.

Private label cards are specific to a single store and lack universal acceptance like major credit cards.

Yes, they do. Late payments or high balances may adversely impact credit scores, similar to regular credit cards.