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Citigroup and Wayfair Are Partnering on 2 New Credit Cards

By Matthew Frankel, CFP® – Sep 11, 2020 at 2:25PM

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The deal is a major victory for Citi's credit card business.

A day after announcing the upcoming retirement of its CEO and that it would appoint the first female CEO of a megabank, Citigroup (C -2.90%) scored a major victory for its credit card business, according to a CNBC report.

Wayfair (W -3.67%) had been seeking a credit card co-branding partner, and Citigroup has won the rights to offer two new credit card products that bear the rapidly growing furniture retailer's name. Citi reportedly beat Alliance Data Systems (BFH -0.81%) for the partnership.

Woman selecting a credit card.

Image source: Getty Images.

Two new credit cards

Like many credit card partnerships, the Citigroup-issued cards will come in two varieties initially. There will be a store credit card that will only be accepted for Wayfair purchases, and there will also be a Mastercard version, which can be used anywhere that type of credit card is accepted.

Both cards will have a 5% rewards rate on Wayfair purchases. The Mastercard version will also earn 3% back on grocery purchases, 2% on online purchases, and 1% on all other purchases.

Also like many other retailer co-branded credit cards, there will be a promotional financing deal available. Both cards will offer no-interest financing for up to 24 months on qualifying Wayfair purchases, as well as preferential rates for longer terms. Specifically, the cards will come with a variable APR of 26.99%, but financing for up to 60 months at a 9.99% APR will be available for major purchases.

Why it matters

This is a big win for Citigroup, which also offers credit cards in partnership with American Airlines (AAL -3.93%) and Costco (COST -4.26%), just to name a few. Wayfair generated $4.3 billion in sales during the second quarter, representing year-over-year growth of 84%. As of June 30, the company's direct retail business had 26 million active customers. To put it mildly, this is a large group of consumers Citigroup could bring into its lending business.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Wayfair. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Citigroup Inc. Stock Quote
Citigroup Inc.
C
$44.26 (-2.90%) $-1.32
Wayfair Inc. Stock Quote
Wayfair Inc.
W
$37.76 (-3.67%) $-1.44
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
COST
$466.40 (-4.26%) $-20.77
Bread Financial Holdings, Inc. Stock Quote
Bread Financial Holdings, Inc.
BFH
$33.17 (-0.81%) $0.27
American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
AAL
$12.21 (-3.93%) $0.50

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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