Despite previous reports indicating credit card issuer Citibank and leading jeweler Zale would end their private label credit card relationship, wire services confirmed the lender will defer a $6 million penalty fee at the heart of the dispute.
The one-month agreement allows Zale more time to raise the capital it needs to fulfill obligations it made at the start of the companies' contract. Hurt by slumping jewelry sales in a down economy, the private label credit card business failed to generate enough fees and finance charges to satisfy contractual minimums.
For Citi to continue offering instant credit in Zale's retail stores, the jeweler must make up the difference between actual sales and the contract's projections. Officials hope that deferring the lump sum payment can help both companies benefit from springtime marriage proposals and an improving economy.
About the Author
Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.