Tuesday, Kohl’s Department Store announced that the transfer of their store brand credit card accounts to Capital One Financial Corp. had been completed as of April 1, 2011.
The cards were previously issued by JP Morgan Chase & Co.
Kohl’s Department Store originally announced the transfer to Capital One in August of 2010 with the assurance that all changes would be transparent to customers and that they would not notice much difference after the switch.
Capital One has signed a seven year agreement to offer the Kohl’s Department Store branded credit cards to consumers.
Kohl’s credit card business has in excess of 20 million accounts at present and accounted for around half of Kohl’s revenue in 2010. The move was announced after the Menomonee Falls based company failed to reach an extension agreement with Chase.
Kohl’s Department Store sold its credit card business to JP Morgan Chase four years ago for a reported $1.6 billion. Kohl’s handled all customer service and marketing for their credit cards while sharing the profits with JP Morgan Chase. Capital One will work under a similar agreement during their seven year contract with the department store chain.
Kohl’s sought out bids from card issuers after failing to reach an agreement with Chase to extend the contract. Vicki Shamion, a spokeswoman for Kohl’s said:
Capital One’s financial bid was attractive, and we believe they will provide the best aggregate partnership.
She went on to explain that the transfer came into effect
upon Capital One’s acquisition from Chase of all right, title, and interest in all Kohl’s branded proprietary credit card accounts and the outstanding balances of those accounts.
Kohl’s is not expecting the switch to Capital One to have any negative impact on earnings for 2011 according to Kohl’s chief financial officer, Wes McDonald. Capital One has offered better financial terms and now that the agreement is finalized, Kohl’s are able to return more money to shareholders in the form of share buy-backs and increased dividends.
Kohl’s had previously kept cash on hand to take the credit card business back on board of a satisfactory agreement could not be reached with a bank. However, now that a new agreement is in place, the company has extra cash reserves available.
Kohl’s now have far more cash available than is required to run the business without drawing on credit meaning they have greater freedom to spend money on buy backs and dividends over the coming year.
Similar Credit Card News:
- [September 14, 2011] Chase Waives Fees For Hurricane Irene Victims
- [January 9, 2012] Chase To Install 800 New ATMs
- [August 22, 2011] Chase Launches Military Banking
- [March 16, 2012] Major Card Issuers Poised To Use Mobile Payments
- [February 16, 2012] GE Capital Credit Card Deal With ShopNBC
- [April 21, 2011] Chase And Wells Fargo Race on EMV-Chip Cards
- [April 12, 2011] Epsilon Security Breach