More Large Retailers Ease Customers' Path to Credit
December 5, 2012
More and more big retailers are helping consumers get financing. This year, Costco added mortgages to its financial offerings; it does not make the loans, but refers customers to partner banks with whom Costco already negotiated discounts on closing costs and interest rates. Home Depot has had credit and loan offerings almost since the company's beginnings. Dwaine Kimmet, Home Depot's vice president of financial services, says the company has improved some of its offers partly because other sources of credit are harder to come by. Many customers cannot access capital due to a lack of equity in their homes. For its part, Wal-Mart has agreements with other companies to offer financial services that include checking accounts, check-cashing, and money orders. A recent report by the Federal Deposit Insurance Corp. found that more and more Americans are leaving the mainstream banking system for their financial needs. More than 8 percent of U.S. households completely avoid traditional banks. Much of this departure from traditional banking comes from backlash against increased overdraft fees and other charges. Consumers Union is studying the financial products offered by retailers to see if they carry any of the same, or different, drawbacks as banks' products.
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