The Office-Supply Superstores' Credit Cards Are Less Than Super
A bank card or the corner stationery store will likely offer you a better deal
The office-supply superstore concept is straightforward enough: offer
convenience and discounts. But what Staples, Office Depot, and OfficeMax
apply to selling paper clips doesn't seem to hold as true for their credit
Business Week Online checked out the private-label credit cards, which are marketed mainly to small businesses, at
the three companies. The cards' main appeal seems to be that they're a handy way to keep track of office-supply expenses and keep them off personal credit cards. All of the superstore credit cards claim to offer more detailed invoices than bank cards for your accounting purposes. But our assessment
is, they're no bargain. The annual interest rates -- 20.8% and up -- are among
the highest in this era of aggressive credit-card marketing. As
for convenience, getting basic consumer information about the accounts
generally took some digging.
To be sure, there are differences with these office-supply superstore credit cards: We found Staples' customer service
and spokespeople to be the most forthcoming, though its Web site offers
no details of financial terms with the online card application form. Office
Depot -- the best of the Web sites, in this respect -- had complete financial
terms attached to the online application, and its staff were helpful. OfficeMax had no financial details about its credit cards on the site. You have
to request an application via E-mail. Moreover, we had trouble finding out
exactly what information comes on an invoice. Michael Weisbarth, a spokesman for
OfficeMax, told us that details about the expanded product-tracking invoices
on OfficeMax's Business Credit Account are between the company and its
None of the three superstores would comment on why the interest rates on their cards are so high. They only said their rates are competitive.
Here's a rundown of what the superstores offer:
Staples: The superstore offers two types of accounts, neither with an
annual fee. Business Revolve is for companies that spend less than $6,000
a year at Staples. Open Account is for those that spend $6,000 or more.
Business Resolve has an APR of 20.8%, with a late fee of $20 for bills
that are 15 days overdue. Minimum payments are the greater of $25 or 1/24
of outstanding balances. Customer service tells us lines of credit run
from $750 to $10,000.
With an Open Account, there is no interest charge, but payments are
due in full each month. If you don't meet the purchasing minimum, you are
automatically rolled into the Business Revolve program and assessed those
hefty finance charges.
Invoices for both services list the product by name, with quantity purchased,
cost per item, subtotal, tax, date ordered, and the name of the
person who ordered.
Office Depot: It also has two types of credit cards for small business.
Business Credit Card charges an annual percentage rate of 20.8% on balances
after a 25-day grace period, but no annual fee. Minimum payment per bill
is the greater of $25 or 1/24 of outstanding balances.
Office Depot's senior vice-president of marketing, Thomas Cross, says
the monthly invoice for the Business Credit Card offers more product-tracking
details than a normal credit-card bill, but he was unable to tell us what
Customer service reps told us that there is also an Office Depot
Technology Card, which charges an annualized 22% after a 25-day grace period.
If you run a balance of $299 or more (while making minimum monthly payments),
there's no finance charge for six months. But, for any unpaid balance on
charges more than six months old, the company bills you interest retroactive
from the day of purchase at an APR of 22%. Customer service told us the
card is primarily for individuals, but many small businesses use it, too.
The invoice isn't more detailed than a bank credit card. Minimum payment
is the higher of $20 or 1/30 of outstanding balances. Late fees vary
from state to state.
OfficeMax: It offers two types of accounts for businesses, the
Business Credit Account and the DirectMax Plus. The Business Credit Account
is for entrepreneurs that expect to spend less than $5,000 a year. The APR
is 20.8%. The minimum payment is the greater of $25 or 1/40 of outstanding
balances. There's no annual fee and no interest if customers pay within
25 days of billing. After that, interest kicks in -- and a late fee of $15
is assessed if no minimum is paid.
DirectMax Plus is actually an open-billing account without a card for
businesses that will spend $5,000 or more a year. There is no interest
charge, but payments must be made in full 20 days from the statement date,
otherwise there is a $20 late fee.
So why aren't office-supply superstores offering better deals? John Grund, principal of
First Annapolis Consulting Inc., a Linthicum (Md.) credit-card consultancy,
points out that the 20.8% APR is pretty much standard for credit cards at retail stores.
But you don't have to look far to find bank cards with better
rates if all you want is a separate account for office supplies. CardTrak,
a monthly online credit-card tracking service, now lists 64 cards with nonpromotional
rates at less than 18.5%, and 44% of the those cards offer APRs from 14% to
15%. Capital One even offers a 9.9% fixed APR card with no annual fee.
Alternatively, you could set up an account with your friendly corner
stationery store. You may not find as much variety. But the billing terms
are likely to be less onerous. Roger Harris, president of Padgett Business
Services U.S.A. Inc., a small-business accounting firm in Athens,
Ga., tells us the average collection cycle for a small business is 30 days.
After that, finance charges are typically 1.5% monthly or 18% annually.
By Jeremy Quittner in New York
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