Second tier CC companies
 

There is an interesting article about Synchrony, a second tier CC issuer, mostly for store credit cards. One statement that stood out was:

Synchrony’s innovation lab in Stamford includes a mock checkout station, where the firm’s technology team tests ways to speed up the credit-card application process. With customers no longer willing to put up with long paper forms, Synchrony is introducing a process where they’ll get texted a link to an application that’s mostly filled out already. With a few clicks, they can receive approval right away.

“We could actually approve you now with nothing, but the consumer doesn’t like that,” Keane said, noting that Synchrony usually has the necessary information already, something most customers don’t realize.

The full article is here:
https://finance.yahoo.com/news/next-...090000401.html

The most interesting part of the article is they plan to go after some of the same contracts that we have seen traditionally carried by BofA/Chase/Citi/Barclays/AmEx from airlines and related. I believe the main one up for bidding is United and perhaps offering a US version card for a foreign carrier.

Synchrony does an okay job on some of the card it offers. They haven't been offering contactless tap on many of the cards and their cardholder websites are not as rich with data as other companies. I suspect even if they offered competitive pricing in a RFP response, their lack of similar experiences might keep them from winning.

What is likely more relevant is they have not been paying off the blog portals or offering much SUB (a $25 one comes to mind). Maybe I am okay with them not trying to create cardholders who will just cycle their cards, but they also could do more to attract a larger share of ongoing spending. They seem to have allowed AmEx and Capital One to match or top many of their non-store reward cards too easily.

The loss rates on bank cards tend to be 300 bps, for store cards it runs about 700 bps.

That client base may not be able to support lots of SUBs and spending bonuses, since the loss rates are so bad.

And this is before we are even in a recession.....

Interest rates on store cards tend to be close to 30% APR, though--and many of those cardholders do carry balances. Plus, if there's a Visa or MC logo on it, they still earn interchange revenue from use at other stores (which people will do despite typically earning few to no rewards on such spend).

Anyway, one store card that I can think of offhand that offers effectively 7-10%+ back (depending on your state) is B&H's new card. I'm not sure how sustainable that is, however, even considering the presumed lack of interchange and the high APR.

This doesn't seem like an exceptional discount for their category, assuming they reduce spending on other types of offers. However, the card terms have this non-standard provision:

I do not know what they mean by a "promotional purchase".

It might be a CYA thing to allow them to offer low interest promos and the like.