<prompt> Human: Do they make a large profit on the interest rate if they tend to be higher? Are they playing the role of a lender to diversify their business into loans or do most all? partner with a financial institution usually? I really have no background in any of this stuff so maybe somebody could shed some light for us common folk. Example: Target, old navy, REI, Nordstrom, etc.  <response>: Retailer doesnt get any significant bounties or bonuses from signing up new accounts. They dont generally get any cut of the interest, and they dont make any significant amount of money from the credit card.There are savings however, for the transaction fees. Instead of paying 1, 2, or 3 to one of the credit card companies Visa, Amex, MC, they dont pay any fee, so little bonus there.The customer loyalty is definitely the most important factor though, consumers that hold a store card doesnt matter if its a store card, or a branded visa mc are 4-6 times more likely to shop per year at that store because it is at the top of their mind. Every time they open their wallet, there is the branding. Its very effective advertising. So when a consumer realized they need a new TV, they immediately think Best Buy, because that card is sitting in their wallet and they see it every day, and know they can get 1 year financing with it as a bonus.This also applies to the little things, consumer that bought the new TV, now wants to buy some blu-rays to watch, so Best Buy is the first thought, and if they need a new toaster...Best Buy will be the first stop.I used to work at a retailer that used GE Capital as the issuer of the card, and we paid for that privilege. They gave us no kickbacks and the only benefits were the loyalty and no transaction fees. This company switched providers a few times over the years, and all had similar terms, but were more lenient with their lending policies. GE Capital was a bitch to get credit with, at least in Canada. They have most recently switched to another major lender, and I believe this is the best deal from the last 12 or 15 years, in that this lender now gives the retailer like half a percent or something like that, although it may have just been for the first year of the contract. EDIT: Forgot to mention the higher interest rate on store cards...its simply because there is a higher risk involved with store cards. Every store card Ive come across offers at least from time to time financing plans, which usually involve no interest or no payments for a given time frame. With the no payment option, there is a very high likelihood of the lender losing track of the borrower and never being able to collect on that debt. The interest that is charged on anything is always directly linked to the risk involved. Credits cards are the riskiest, and department store cards are the riskiest version of a credit card. 