The clothing retailers offer their customers more than sweaters and jeans.
Large apparel companies also sell credit cards, usually with expensive fees, such as the one offered by The Gap’s 21.7 percent beginning interest rate and late payment charges. In the year 2019, Macy’s store credit card revenues of $771 million were responsible for more than half of Macy’s operating earnings.
As researchers researching the working conditions of workers in retail, We never anticipated to discover about credit cards. When we asked workers about the worst aspects of their jobs, we were expecting to be told about poor wages, inconsistent schedules, and rude customers.
These things are important. However, many employees viewed obligations to push credit card applications to customers as the most dreadful aspect of their job. None of the retailers featured in this article were able to answer questions about their policies for consumers at the corporate level. Credit cards for their brand names.
What makes this job so difficult?
Our research suggests that they are aware – at times through personal experience – how credit cards can be detrimental to an individual’s finances.
“The credit cards have a 25% interest rate, and people don’t always read that,” Elise, an employee at Target, explained. “They saw it as ‘something else I can use to pay later and not have to pay money now.'”
For example, a Gap customer who purchases $300 worth of clothing and makes the minimum payment each month, which is about $25, will be able to pay for the purchase in 14 months and will pay more than 40 percent in interest. If they fail to make a single payment, they’ll be charged more than $75 in fees and interest.
Rachel has worked for American Eagle and pointed out that credit cards are often detrimental to ratings on credit: “People, especially my age … don’t know that. You’re only 18 and credit cards sound amazing.”
Gabe, Another American Eagle employee, refers to the store’s credit card as “a Visa that has the American Eagle logo at an extremely high-interest rate,” explaining that only “gullible” customers sign up.
Credit card debt can create significant difficulties. A lot of people are forced to work several jobs in order to pay their debts.
In the event of being in arrears with credit card debts, it can lead to higher interest rates as well as late fees. This makes it more difficult to pay the debt. If you file for bankruptcy, the person who clears their credit card debt might not be able to get loans to purchase a vehicle or home for ten years or more.
Credit also has the potential to increase the gap in income. Federal Reserve data on denials of credit also show that for those with the same pay, Black and Hispanic consumers are more likely to see their applications rejected.
How does it work
In the majority of the 35 stores that we looked at, Cashiers must solicit customers to sign up for a credit card at the store. Employees cannot refuse to sell credit cards while working shifts at the counters.
Through our investigation, we discovered that management tracks these sales through electronic surveillance to determine precisely how many credit cards each employee sells in every shift. Management is able to monitor how employees and stores sell credit using information gathered from the cash drawer.
Tara, an employee of the shift leadership for shifts at American Eagle, said she had ordered to market 2.5 credit cards per 10 transactions made at the cash counter.
Old Navy management also required cashiers such as Danielle to sell two credit cards every shift. Events that promote sales increase the goals. For instance, Danielle was told to sell between five and ten credit cards in the Black Friday shifts.
Our study found that employees who do better than expected, such as the sale of five credit cards in the normal work shift, could receive a gift card, the chance to earn a bonus of $1-5 or a gum pack. Stella, an employee at Macy’s worker, shared, “We get credit for people who don’t even get approved for the applications.”
The majority of those who were interviewed told us that in the event that they don’t have enough credit cards, they might end up off their schedule and without having a job.
Corporate credit push
Our employees were shocked by our findings. They didn’t think clothing retailers should focus on selling credit in the same way as they did selling clothes.
As Melissa, who is a sales associate at J.C. Penney, told us, “Surprisingly, our main concentration is on credit applications. They actually drive this home. They would like to have as many as possible.”
Retailers claim that credit cards can offer discounts on purchases, are more attainable to use than conventional credit cards, and let customers build credit histories.
However, managers aren’t willing to tell employees that credit card use leads to profits. Nicole is employed by Nordstrom Rack and recalled her manager asking her,”‘Do you know why we have a credit card?’ … I was just, like, ‘So you can make money on the interest?’ They were, like, ‘Well, a lot for brand awareness and to remind people if they have the card in their wallet they might come to our store.'”
When Nicole thought that credit cards were designed to make more money, however, her manager rebutted her, focusing on “brand awareness” instead. Based on Nordstrom’s annual financial report cred, its card sales generated $387 million in revenues in 2021, compared to $14.4 billion of sales in apparel.
Many employees, such as Carmen, who has nearly two years of experience in retail at Sears as well as Free People, find it difficult to market something she believes will hurt customers. According to her, credit card purchases “are the worst thing ever.” “It’s like trying to push something that you’re trying to make it seem like it’s something that’s so good,” she explained. “But ultimately it’s not. It’s an additional way of spending money.”
They realize, like Grace, who is a T.J. Maxx worker, that economically, “it makes sense but morally … it’s not what’s best for our customers.” She also explained, “If they want to purchase our products, it’s their decision, but when we decide to be charging them interest rates it’s a different matter. This really annoys me. off.”
Marty has been working at Target for the past 3 1/2 years. She is also concerned: “I just hear stories of … receiving people on food stamps and enroll for these credit cards which will harm their credit scores and they’ll get refused … however (the managers) persist to encourage the issue. It’s like was it moral to do it?”
Some workers are able to resist the mandates. Grace, who was a T.J. Maxx worker, said, “These women come in, and they’re like”Well, I’ve been rejected twice. Let me try again. Then I’m thinking, ‘No, you shouldn’t attempt to do it again because that’s likely cause your credit to be dragged down further, and that’s not good.'”
Corinne has worked for more than five years with retailers like J.C. Penney and Forever 21. She has also refused to offer credit, stating, “I preferred not to be on register … because I usually don’t ask people.” Corinne did not go to the register, rather than be punished for not allowing customers to sign up for credit cards.
Even Angela, who works in Old Navy and says she “rocks at selling credit cards,” insists, “It’s the one value of that store that I just don’t align with … the worst part of the job.”
Our study uncovers that employees in the retail industry, even though they are in low-paying jobs that have unpredictable hours, frequently view credit cards as the most challenging aspect of their careers. This is because they are in a relationship with their customers and wish to assist them but not bring them into financial ruin.