The brick-and-mortar retail industry is having a tough time. Some stores are going out of business, while others may be downsizing before permanently shutting their doors somewhere down the road.
If you have a store-branded credit card—meaning the card can only be used at that retailer—then you may be unsure of what to do if the store goes out of business.
A retail credit card can offer shopping discounts at the store it’s tied to, but most store credit cards usually carry high interest rates. These can result in high fees if you don’t pay off the balance each month.
If you have a store-branded credit card and the store goes out of business, here are some things to remember:
You’re still responsible for the debt. Just because a store closes, it doesn’t mean you’re off the hook for the balance owed. The credit card issuer isn’t the store, but a bank, and it still wants to be paid. Pay off the card balance as quickly as you can to avoid delinquency fees, which could hurt your credit score. Even if stores close, expect to get a bill on your store-branded credit card.
Your card could be sold. Your store credit card account could be sold to another retailer. On your credit report, this would be shown as a closed account that has been sold or transferred to a new company. This company will contact you about the transfer and where to send future payments.
You may get a new credit card. The card issuer may convert it to a generic credit card. Instead of the retailer’s logo on the credit card, it will likely have a major bank logo on it because the store went bankrupt or is out of business.
Your outstanding balance will be moved to the new card. Some banks may not issue new cards but will let you use the old one. Check with the card issuer for details.
The card might work online. Some businesses may close their physical stores, but continue doing business online, where the store-branded card can still be used. This will allow you to continue earning loyalty points for purchases. If the business is purchased by another company, it may transfer the card and rewards program to its brand, which may not be a store you want to continue with as a customer.