Published on: November 6, 2008Business Week reports that Walmart “has held talks with Herbert and Marion Sandler, founders of Golden West Financial Group, about a new credit card that would offer lower interest rates and few of the onerous fees associated with traditional credit cards. Given Wal-Mart's massive customer base and the current turmoil in the banking industry, the move could have a big impact on lending in the U.S.”
The retailer, however, says that while it has explored the possibility of introducing such a credit card, it has no immediate plans to do so.
However, Business Week writes that “the timing for a Wal-Mart entry seems right. Banks nationwide have been cutting credit lines, hiking interest rates, and raising fees for credit-card customers they deem high-risk. Those moves come amid a surge in credit-card borrowers running late in their payments because of the slowing economy and the easy lending terms of years past.”
At the same time, Walmart has gone on record that it is seeing sales take a hit because people have either maxed out their credit cards or have decided to stop using them until the economy turns around.
The retailer has been stymied in its efforts to get into the financial services in the US, with federal regulators bowing to concerns on the part of those in the mainstream banking business about a non-bank getting into financial services. However, Walmart has opened a bank in Mexico, and plans to do so in Canada.
- KC's View:
- I suspect that “no immediate plans” may mean that Walmart will announce this when it is ready to do so…and that could mean next week or next month. This seems like the perfect moment for Walmart to position itself as being pro-consumer in a tough economy, especially if it does so at the expense of the traditional financial services business that has proven itself to be afraid of a little competition from the Bentonville Behemoth.