According to a report coming from USA Today, a lot of major retailers confirmed their plans to close thousands of locations in the United States – over 9,500, to be more specific – affecting a lot of clients who currently own rewards credit cards issued by those stores.
However, this doesn’t necessarily mean the end of the card as well, since their ‘fate’ depends on the retailer’s business plans, as well as the decision the bank issuing the cards makes.
The four scenarios to consider
Specifically, the impact the closure of a retailer can vary, so there are three main scenarios you need to consider:
You can shop online in order to use the card: If the stores decides to move its sales only, you can continue using the card on the website and make payments online. Of course, this will also attract shipping costs. Also, if the card is co-branded, it will most likely be accepted by most merchants.
You will be offered a new credit card: In most cases, when a retailer decides to go out of business, the rewards program also ends. Still, most card issuers will try to find a replacement product or a reward value proposition for the customer. Such replacements can be a cash-back credit card or one with 0 percent introductory APR offer.
Your card will be closed: Worst case scenario, your store card will be completely shut down, as soon as the store does it. In this situation, you will be announced about the card’s expiration date.
Your credit card account will be sold: Finally, it’s worth mentioning that banks want to maintain their relationship with existing customers, so in the situation of a ‘retail apocalypse’, the issuer will own you debt, so they will eventually sell it to another issuer. In this situation, the new issuer should alert you about any significant changes to the terms, with a 45-day advance written notice.
The impact on your credit
No matter what happens, you should continue making payments on your card. Otherwise, there’s a serious risk of your credit score being affected! The impact depends on the age of your account and how much of the credit you’re using.
