Tempting offer attracts wrong shoppers

Several years worth of significant price deflation had already put flat panel televisions within the reach of most consumers, and, this week, Target removed another potential barrier with the introduction of a limited-duration 0% financing offer. Shoppers have one week to sign up for Target’s REDcard and pay no interest until September on the purchase of television’s larger than 32 inches. The offer was featured on the cover of this week’s circular, and the company distributed a press release announcing the promotion. Historically low-interest rates make it easy for retailers to offer “same as cash” type financing offers, but you have to wonder about the credit quality of the customers who respond to such incentives, considering a 42-inch LCD can now be had for less than $500. It may not be a very scientific way of evaluating risk, but chances are if an individual’s cash flow is such that they can’t swing the purchase of budget priced flat panel outright they might not be a good addition to Target’s credit portfolio.