GE Plans to Exit Credit Card Business
General Electric is best known for making appliances, but it is also a giant in the credit card industry. An estimated 55 million store credit cards are financed through GE Capital.
Now, this store credit card issuer plans to get out of the financial industry in pursuit of something more industrial. They want to build jet engines.
More specifically, GE is looking to move into industrial products, like wind turbines, health care equipment and machinery.
GE Capital has struggled with the lending side of their business since the financial reform, and now they are being regulated just like a bank.
“It just means more rules and it has made the credit card business less attractive as a part of GE,” said financial analyst Brian Langenberg.
According to the Wall Street Journal, their credit card business decreased 13% last year, but the company still earned $3.24 billion in this financial segment.
The plan is for GE to start cutting back in this credit card area immediately. Explained Morningstar equity analyst Daniel Holland, “GE can keep reducing the size of that business; it makes it less and less important for the Treasury to pay attention to.”
It may take a while for GE to fall off the grid completely. It appears that retail stores will have to find a new lender to back their credit cards.