A day after announcing the upcoming retirement of its CEO and that it would appoint the first female CEO of a megabank, Citigroup (C -1.09%) scored a major victory for its credit card business, according to a CNBC report.
Wayfair (W -3.72%) 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 3.15%) for the partnership.
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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 1.51%) and Costco (COST -0.12%), 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.
