Banking, finance, and taxes

At Last, Target Dumps Credit Card Business

Big-box retailer Target Corp. (NYSE: TD) today announced that it has agreed to sell its credit card business to TD Bank Group (NYSE: TD) for the value of its receivables, currently about $5.9 billion. In January, the retailer failed to strike a deal for the business.

Target will retain the servicing of its REDcard rewards program and its Visa card accounts. The sale includes only the loan portfolio. Under the agreement, TD will for seven years “underwrite, fund and own future Target Credit Card and Target Visa receivables in the United States.”

TD and Target will share the profits from the portfolios, with Target getting the larger piece, presumably to offset the servicing costs.

Target expects to report a third quarter pretax gain of about $150 million as a result of the sale and at closing expects to recognize an additional pretax gain of $350 to $450 million. The sale is expected to close in the first half of 2013.

Target’s shares are down about 0.3% at $62.05, in a 52-week range of $47.25 to $65.80.

TD’s shares are down 1.4% at $82.58, in a 52-week range of $65.20 to $86.56.

Paul Ausick

Find a Qualified Financial Advisor (Sponsor)

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.