What: The US is considering a change in credit card regulations that could affect US department stores’ profits.

Why it is important: Credit card (and the fees associated with late repayments) have a disproportionate impact in the bottom line of many US department stores

Department stores are facing a new challenge with potential changes to credit card late fee regulations and rising delinquencies. The Consumer Financial Protection Bureau's proposed rule to cap late fees at $8 could significantly impact the earnings of stores like Kohl’s, Nordstrom, and Macy’s, which have relied on credit card income to boost profits. With credit card income being a crucial part of their operating income, any reduction in late fees and an increase in delinquencies could pose financial risks. Strategies to mitigate these impacts, such as adjusting interest rates or becoming more selective in credit extension, have their own limitations.

Credit cards could swipe US department stores’ profits