Lessons From Spiegel

Understand that private-label credit cards are a risky business. Analysts estimated customers’ recent default rates at 17 to 20 percent of all Spiegel credit card receivables, noted a report in the New York Times. In all, 41 percent of purchases companywide and 73 percent from the Spiegel catalog were made with the private-label credit cards issued through a Spiegel-owned bank, according to the Times. Take-away tip: Think carefully before becoming a sub-prime lender to your customers who don’t qualify for Visa, MasterCard or other mainstream credit cards.