Woolworths to Enter Credit Card Market

Australia's largest supermarket retailer Woolworths, recently revealed plans to release a store-branded credit card in 2008, while announcing future intentions to offer a broader range of financial services, including home and car insurance, as well as personal loans.

"Our first product will be a credit card and of course when you get into financial services all of those (other services) can be options going forward," Woolworths Chief Executive Michael Luscombe said.

Major competitor Coles already offers a MasterCard credit card through GE Finance, offering nil annual fee, a zero per cent balance transfer and a standard interest rate of 18.99 per cent. Up to 8 cents per litre of fuel can be saved by combining the 4 cent voucher offered for shopping at Coles, with buying fuel using the Shell credit card.

Department store David Jones also has plans to introduce a branded credit card next year, with Visa and American Express competing for the rights to the card.

Woolworths is currently in talks with the banks about the credit card, which they hope will perform better than their last joint-venture into Financial Services with the Commonwealth Bank; 'Ezy Banking' was not a great success. This new card will also be available through Officeworks, a company that Woolworths is considering acquiring, pending approval by the ACCC.

Woolworths is expected to maintain operating control of the new card, although no firm decision has yet been made in relation to whether the card will attract an annual fee. The Coles Group, having ceded control of its card to GE, offers it's card free of annual fees. Cards with fees attached tend to charge around $30 to $40 (or as much as $250) per annum in exchange for significant rewards schemes, and in this case, potential savings on petrol.

Published on September 9-th, 2007 in Credit Cards
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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