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


Private label credit cards, exclusive to specific stores, offer unique benefits and encourage customer spending. This article details their functionality, advantages, and examples.

What are private label credit cards?

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.

How do private label credit cards work?

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.

Examples of private label store credit cards

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.

Full-service credit cards

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.

Weigh the risks and benefits

Here is a list of the benefits and drawbacks to consider.

  • Encourage customer loyalty and repeat business
  • Offer discounts, rewards, and extended return policies
  • Enhance customer convenience
  • Restricted to use within a specific store’s network
  • May have higher interest rates
  • Potential negative impact on credit if mishandled

Frequently asked questions

What’s the main difference between private label cards and regular credit cards?

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

Do private label credit cards affect credit scores?

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

Key takeaways

  • Private label credit cards are exclusive to specific stores and aren’t widely accepted.
  • They incentivize spending through rewards, discounts, and extended return policies.
  • Some retailers also offer co-branded cards, usable anywhere Visa or Mastercard is accepted.
View article sources
  1. The Economics of Credit Cards – Chapman University
  2. Private Label Consumer Credit Card Program Agreement – U.S. Securities and Exchange Commission
  3. Private Label Credit Card Program Agreement – U.S. Securities and Exchange Commission
  4. Everything you ever wanted to know about CC’s – Carnegie Mellon University