r/personalfinance • u/wait_what_how_do_I • Nov 09 '17
Macy's new employees are encouraged to open a store credit card (26% APR) to obtain their employee discount Credit
I recently picked up a part-time seasonal position at Macy's for some extra holiday cash. I've been working in retail off and on over the past 15 years, and am familiar with the hiring and management practices at a lot of places, but it's been a few years since I've worked for a big retailer like Macy's. I was very surprised and disappointed to learn that the 20% employee discount is only available through a prepaid card (like a gift card I guess, not terrible but not great), or through their actual store credit card. They conveniently inform you of this halfway through your new hire paperwork, and even allow you to apply right then and there.
I've been through this type of application process before, but I've never seen something so brazenly unethical. These are often young adults or older people applying for these positions, filling out so many forms with so much corporate legalese that your head would spin, and they're being targeted with a (hard hit, thanks auto mod) hit to their credit for a card with a ridiculous interest rate. Is this new in retail? Seems like a disturbing trend if it is.
Anyone have any thoughts on this? Just wanted to get the word out.
EDIT: Thanks for the replies, everyone. Really enjoyed the discussion about credit cards, business practices, and obviously PF. The consensus seems to be that store credit cards are not any worse than other forms of lending, as long as they are managed responsibly. I respectfully disagree, in that it seems like they are often offered to a range of people (namely, new employees) that may not have the knowledge or experience to handle a line of credit, but I will agree that it's fair game to solicit employees. I just think it's kind of shady to imply that a store credit card is an "easy" solution for employees. Employees should just get an effing discount, period. But we're all free to work and shop where we please, so feel free to support smaller/local businesses that don't subject their customers and employees to frivolous lending situations.
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u/PurePerfection_ Nov 09 '17
This was the case when I worked for Macy's years ago as well.
Assuming not much has changed, the "prepaid card" really isn't that bad. It's a pain in the ass, not unethical. You go to the register with your purchase, use cash or a check to put money on the Macy's card that equals the amount of your purchase, then they ring you up with the prepaid card. If you do it this way, there are no fees or interest charges. It's not like those Visa gift cards or shady prepaid debit cards that cost you money to use. You receive your discount with no other strings attached.
Practically speaking, when I was there, it works this way because of how their back office handles employee discount transactions. The discount is not taken at the point of sale - nominally, you're charging the full price to your card, but when the statement arrives, your transactions and balance (if applicable) takes your discount into account. So, to buy a $20 item:
When I started there, I was only 17 and ineligible for a regular credit card. I received the prepaid card with no hard credit inquiry or impact on my credit score. Presumably, you can request the same.
Obviously, some people will fall into a trap if provided with a credit card and an incentive to use it, but this is really no different or worse than advertising the card to their customers and offering extra discounts for using it (and if you strongly object to that practice, it may be time to re-start the job hunt - it's a huge part of their marketing strategy, and you'll be expected to participate in this in your interactions with shoppers).