July 1, 2009
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News: Sears Offers Appliance Payment Protection
Sears Holding Corporation wants to alleviate consumer concerns about losing their jobs with its new credit card offer related to the purchase of appliances. The new program will credit the consumer's account a 12th of the appliance purchase price for every month the individual remains unemployed if they lose their job within 60 days to a year after making the credit card purchase. That means the entire purchase price would be forgiven if the individual remains unemployed or a full year. There is one catch, however. The customer must charge at least $399 on his/her Citibank co-branded Sears card between July 6th and August 1st. The company expects to run the campaign for one month and depending on its success could possibly extend it. The offer was announced at practically the same time that Citibank announced it would be raising interest rates on many of its Sears co-branded credit cards. The fine print on this offer reads that the annual percentage rate (APR) is 20.40% variable.
Sears says it developed the offer based on comments by customers who say they are putting off making appliance purchases because of employment concerns and a weak economy. The retailer experienced a decrease in sales of 11.7% for same-store in the first quarter as customers have significantly curtailed their credit card spending. Sears has launched the new program in response to the drop. They are confident that the offer will motivate customers to use their credit cards to generate increased sales. The mass retailer hopes to relay the message to its customers that they care and want to help alleviate their fears relating to the current economic conditions.
The new program is expected to put more Sears' credit cards in circulation as customers open new accounts to take advantage of the promotion. Although the promotion gives the illusion that Sears is taking a great risk, in reality the risk is very low and the company expects the program will generate more than just appliance sales.