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With banks hiking rates and fees, the time may be right for Wal-Mart to bring its cost-cutting ways to the credit-card industry Is Wal-Mart Stores (WMT) going to bring its price-chopping ways to the credit-card industry? BusinessWeek has learned that the retail behemoth 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. Just the idea of it is winning praise from consumer advocates, some of whom have battled the controversial retailer in the past. "We always welcome any new credit cards if they offer a solid, low-cost product that doesn't have trips and traps," says Travis Plunkett, legislative director of the Consumer Federation of America, which opposed Wal-Mart's 2006 effort to get a bank charter in the U.S. Wal-Martsays it has talked to people about what some in the financial-services industry call a "clean card," but the company has no immediate plans to introduce one. "We are not pursuing these ideas at this time," says Wal-Mart spokeswoman Linda Blakey. The Sandlers sold Golden West, a big mortgage lender, to Wachovia (WB) just before the housing bubble burst. Wachovia is now being acquired by Wells Fargo (WFC). 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. Source : businessweek.com/ |