The most loyal and engaged shoppers are the ones who still pick private-label cards, a new study says.

To make the most of this devotion, retailers must tie their private-label cards to a branded loyalty program, rather than view those cards as a way to simply generate new account volume, Auriemma Consulting Group states in its research on U.S. private-label credit cards.

In doing so, the retailers and issuers obtain important cardholder data that can help them shape marketing programs tailored specifically to their most loyal customers, the study says.

More than half of the private-label cardholders, at 56%, identified themselves as loyal to the retailer whose name appears on their credit card, says Scott Strumello of New York- and London-based Auriemma Consulting.

"I shouldn’t have been surprised by that percentage, but for a number of years, the market was moving away from private-label credit cards towards co-brands," Strumello says. "Issuers kind of de-emphasized private-label credit cards."

Auriemma surveyed more than 400 credit card users in the U.S. during November 2013 for the report. Auriemma focused on cards that work in a particular retail chain, such as Sears, or to buy a particular brand of gasoline.

The study did not include retail-affiliated co-branded cards that use a major card brand's network, such as Target Visa, Nordstrom Visa, Sears MasterCard, Walmart Discover or Costco American Express. 

Common private-label credit card providers include General Electric, Alliance Data, Capital One (formerly HSBC), TD Bank (formerly Shopper’s Charge) and Citi.

"The biggest is obviously the Sears card, which is now issued by Citi, but others include Macy’s with Citi and Best Buy with Capital One," Strumello says.

However, consumers loyal to a specific retailer don't automatically turn to the associated private-label card for purchases, Strumello says. "Many are also very credit-savvy and recognize that private-label cards, generally, may not always have the best financial terms," he says.

In some cases, private-label cards can carry higher annual percentage rates than other cards. Only four in 10 consumers, at 43%, say fees and APR are higher for private-label cards, while 30% say card qualifications are lower for those cards.

Retailers offering private-label cards counter those perceptions by providing convenience, such as the consumer not always needing the card on hand to initiate a purchase, Strumello adds.

Private-label cards can also provide benefits to loyal shoppers, Strumello says.

"Some of the common ones are advance notice of sales, sometimes early admission into the store on sales days, free giftwrapping in the store, and others," he adds.

Rewards are an added benefit that may be part of some private-label card programs, but not all offer such programs, Strumello says.  Thirty-two percent of higher-income earners are more likely to suggest rewards as being the primary difference between their private-label and general-purpose cards, the report says.

In addition, the study indicates younger consumers often view private-label cards as a way to initially establish credit through loyalty to a favorite retailer.

Nearly 40% of the consumers who were denied a general-purpose credit card view applying for a private-label card as a credit-rebuilding step, the study says. However, less than one-fifth of all consumers have been declined a general-purpose card.

"Another group viewing private label cards for starting a credit history is recent immigrants to the U.S. who may not have any established credit history in the country, Strumello says. 

An "impressive" fact for retailers offering private-label cards is they can generally count on their customers to hold those cards for a long time, Strumello says.

More than 40% of the cardholders say they have had their private-label card for between one to four years, and 13% say they have had the cards for 14 years or longer.

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