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Target Discontinues Visa Credit Card

By , CardRatings contributor
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Target Discontinues Visa Credit Card

Target credit cards will stop carrying the Visa logo after April. In a statement released to the Associated Press, company officials assured consumers that current Target Visa cardholders would continue to enjoy access to their accounts. New Target Red Card applicants will receive credit lines and cards accepted only in Target retail locations and on the e-commerce website it operates in partnership with Amazon.com.

Although numerous credit card issuers have scaled back affinity programs over the past year, Target becomes the first retailer in 2010 to discontinue a payment platform affiliation for self-managed accounts. Target started offering its own credit cards in 1995, but kept the financial operation in-house instead of outsourcing it to a private label service provider. Under investor pressure, Target sold a minority stake in its credit card portfolio to JPMorgan Chase in 2008.

Target's actions may inconvenience customers who intended to use its branded Visa card at other merchants, but the move cushions the retailer's financial position. By restricting Red Card purchases to its own stores, Target significantly minimizes the cost of any future charge-offs. The company can reduce spending on fraud protection and payment processing as Visa transactions phase out from Target's portfolio.

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