Scotia Acquires Sears Canada Credit Card Portfolio From Chase

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Last updated on April 12, 2020 Comments: 22

In another shake-up to the Canadian credit card industry, Scotia has acquired the Sears Canada MasterCard and private label credit card portfolios from Chase Canada.

The acquisition includes approximately $1.7 billion in credit card loan receivables and 2 million accounts. Scotia will also acquire some of Chase Canada’s credit card operations, as part of the agreement. It will not be entering into a partnership with Sears Canada.

Scotia will be converting Sears MasterCard and private lavel credit card holders to a Scotia credit card in the near future.

This is another significant move by Scotia in the Canadian credit card marketplace, which has recently launched the GM Visa card and took an equity stake in the credit card business of Canadian Tire Financial Services.

Implications For Canadians

There are a couple of significant implications for Canadians:

  • The Sears credit card was one of the largest programs in Canada. Over 2 million accounts will now have to be converted from the Sears card to Scotia.
  • Canadians will lose one of the few programs to offer no foreign transactions fees on its credit cards (update as of Jan 5, 2016 – Scotia has confirmed it will maintain the same terms and conditions for existing cardholders it converts to the no-fee Scotia Momentum card).
  • Some competitors, like the Rogers Platinum MasterCard, are now also offering no foreign transaction fees, with 1.75% cash back and no fee to exploit the void left by the program’s termination. No foreign transaction fees, were one of the programs big selling points.
  • With no clear replacement partner in place, this will add even further pressure on Sears Canada’s viability.
  • It looks like Scotia should be joining Desjardins and TD in the private label credit card space, after picking up the private label portoflio AND operations of Chase Canada.
  • Raises the question of what Chase will do with its Amazon and Marriott credit card partnerships in Canada.

What It Means For Sears Canada

For Sears Canada, it could spell trouble. The revenues Sears Canada derived from Chase were significant contributors to the companies earnings. Sears has not announced a partner to replace Chase – which indicates they may not have one, and most likely none have come to the table. Moreover, the fact that Scotia did not enter into a co-brand agreement with Sears, demonstrates it either didn’t have faith in Sears Canada’s management or in the retailers future, or both.

Moreover, we still don’t have an answer as to how Sears will be offering promotional rate financing to its customers. We would expect Sears to have some type of replacement strategy in place – they just haven’t announced it yet, which is odd given the magnitude of the situation.

Regardless, even if Sears Canada does end up with a new partner, we suspect the economics of the deal will be far less favourable than the revenue share deal it had with Chase, for two main reasons. First, Chase likely overpaid for its partnership with Sears Canada, in order to help Chase get into the Canadian marketplace – Sears won’t see a market-entry type deal again. Second, Sears currently presents significant risk to any new partner – given questions about the viability of its future operations.

Unfortunately, the loss of income from Chase, despite some one time payments, may only further launch Sears into a tailspin.

What It Means For Chase Canada

While Sears Canada was certainly Chase’s largest credit card portfolio in the country, it still has the Amazon and Marriott credit card programs. It seams that Scotia has also acquired Chase’s call center and some of its other Canadian operations – fraud, collections, recovery.

The question is, does Chase intend to continue its partnerships with Amazon and Marriott in Canada?

What It Means For Sears Cardholders

Unfortunately Sears MasterCard and private label cardholders will have to go through a conversion to a Scotia credit card. Scotia will be converting Sears MasterCard to the no-fee Scotia Momentum Cash Back card. It offers 1% cash back on gas, grocery, drugstore and recurring payments, and .5% everywhere else. Scotia has confirmed it will not charge a foreign transaction fee on converted accounts.

Frankly, we think former Sears cardholders looking for a no fee cash back alternative can do better with BMO’s no fee 1% cash back card on EVERYTHING. Or, if you’re a Rogers or FIDO customer, with the Rogers Platinum MasterCard which offers 1.75% cash back on EVERYTHING, and has no annual fee when you set up your card for pre-authorized payment.

Presumably, Sears cardholders took out a Sears card because of the Sears points or some type of promotional financing. Would they use a Scotia cash back card, travel card, Scene card? Or will they close accounts in droves, with Scotia facing mass attrition.

For Sears cardholders looking to transfer their high interest credit card balances, there are plenty of options to reduce their interest rates and we’d expect the Canadian balance transfer marketplace to heat up.

With respect to the conversion itself, there is always risk of execution. When converting accounts, Scotia will have to do so while properly attributing balances, payments, etc… Recent conversions in Canada have not always been flawless, especially when going from one processing platform to another as is the case here.

Author Bio

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Article comments

22 comments
Lyette says:

I’ve been trying since October 15/21 to get a confirmation letter stating that me Sears card was paid off in 2015…Equifax credit bureau still has this card with a balance on my personal credit report. I called the Nova Scotia bank twice …. First I was told they’d send me a letter and it wasn’t done so I called again and this time they said they’d send an email..no news yet
What am I supposed to do to clear this false debt on my credit report???

Daniel from GreedyRates says:

Hi Lyette,
You can dispute the line item on your credit report. To initiate a dispute with Equifax, fill out the Consumer Credit Report Update Form and mail it to Equifax (the address is at the bottom of the form). Once you provide the necessary information, they’ll double check the info they have on hand and contact the company where the information came from. If it’s deemed incorrect, they’ll update your credit report to reflect. Note the process can take up to 30 days to complete and you’ll receive a written letter with the results. Good luck!

Terri Flaten says:

I think I am getting credits
Put on my MasterCard from Nova Scotia bank that has been discontinued and cancelled. Can I have a number to call.

Daniel from GreedyRates says:

Hi again, Terri.
Which Scotiabank mastercard did you have and cancel?

Terri Flaten says:

I have retired my MasterCard from bank of Nova Scotia and think credits are goin g on the card. Do t have the old card with number How should I deal with this

Daniel from GreedyRates says:

Hi Terri,
If you’ve cancelled the card, any credits that are refunded will eventually make their way back to you in the form of a cheque in the mail. If you have any concerns, feel free to call the credit card’s customer service line to explain your situation and they can help give you peace of mind.

John says:

Sears account went R9..8+years ago..Scotiabank now owns the portfolio..am on social assistance..can Scotiabank tag me for the debt?

The GreedyRates Team says:

Hi John,

If your Sears account was R9, then it means your defaulted balance for the card will be on your credit report for at least 7 years from the date of last activity. The last part of that sentence is most relevant here, as it may lengthen the amount of time that the R9 remains on your report. ‘Last activity’ is the last time you paid towards the debt, so if you tried while it was in collections, for instance, it could add some months to the length of time it’ll show on your report.

Keep in mind that R9 entries might stay on the report even after the 7-year window because of mere error, and sometimes customers will have to get their report and dispute erroneous entries. It’s been long enough that we don’t believe Scotia will do anything more than offer a proposal, so in the meantime get your credit report and a full view of what’s on it. Let us know how it goes and good luck!

GreedyRates

Ava says:

Hi,
I want to change the address of my sears/scotia credit card bill of statement so i can keep track of my payment and balances. How can I do this? Pls help. Thanks

The GreedyRates Team says:

Hi Ava,

We imagine it’ll be easy to get this done. If your card was issued by Scotiabank you can simply call them, and they’ll connect you with someone who will change your account’s billing address. Just dial 1-800-4SCOTIA and navigate your way through the automated phone system. Let us know if you run into any problems, and we can try to help. Good luck!

GreedyRates

Angela Hutchinson says:

Out of the blue with no notice the Sears MasterCard that i have not used in over 18 months was converted without my knowledge to a ScotiaRetail card. I have a ScotiaLine payee on my TD Bank Account and inadvertently paid a $3000 payment to the ScotiaRetail card. TD Bank can’t do anything to help me at this point and I’ve been advised to contact Scotia Retail for a refund and I don’t know who I am supposed to call????

The GreedyRates Team says:

Hi Angela,

Thanks for the interesting comment. The bankruptcy and closure of Sears is a long time coming, and it makes perfect sense for them to shutter their branded financial products lines accordingly. In fact, it was originally Chase that bought Sears’ credit products, but Scotia recently acquired them from Chase and has completed their rebranding, which you’ve just noticed. We wrote an article about Scotia’s acquisition of Sears’ portfolio, and what it means for you. Unfortunately, we can’t help with the automatic debit that TD did to your newly-transformed Scotia account, but we’re sure that it can be refunded if you call Scotia and request it. The number is 1-800-472-6842.

As far as the card you now have, the Scotia card offers 1.00% cash back on gas, grocery, drugstore and recurring bills payments, and 0.50% elsewhere. You can also apply to switch to Scotia’s Passport Visa Infinite card if you want, which offers the same 0.00% foreign transaction fees that your Sears card used to. However, you’ll also need to qualify for the card, which has a minimum annual income requirement of $60,000 yearly. Good luck!

GreedyRates

chit reyes says:

We bought a GE fridge sometime in October 2013 and we bought an additional 4 year warranty (total 5 year warranty) from Sears using our Sears credit card. Now the fridge is acting up. I spent a day calling around asking who took over the warranty and nobody can give us an answer. A technician told us to call the credit card company that we used in paying for the fridge and we can get refunded for the warranty amount. Is anyone aware of this and please let us know who to call.

The GreedyRates Team says:

Hey Chit,

We’re not exactly sure how to navigate this issue. Since Sears is now bankrupt and out of business, they’re surely not the place where you’d ask for a refund on the warranty. The Sears credit card, however, was issued by a company or bank that is likely still in business. Check the card to see who issued it. It could be a Visa or Mastercard, for example, in which case you could call and inquire with the relevant party. Just say that you still hold the Sears membership card, and they’ll likely have a process in place to help you out.

Best of luck!
GreedyRates

Barb says:

I received no notification from Sears or Scotia that my Sears card would be closed. I was not even aware that cards were being converted.

GreedyRates says:

Hi Barb, thanks for commenting. If you haven’t received notice of the change of ownership yet, you probably will soon. Scotia has plans to convert Sears Mastercards to Scotia, but some customers are reporting that their cards are being cancelled. If this is not the case for you, you can continue using your card as normal. If your card was cancelled, however, you should know that there are other cards that offer the same benefits (such as the exemption from foreign transaction fees). Please let us know what happened and how we can help. We’d love to provide recommendations and work with you to keep your credit as healthy as ever, regardless of this acquisition. Thank you!

GreedyRates Staff

Loretta says:

My sears card was not converted and the $32.00 credit I had on it is now $7.00 after a $25.00 “inactive service fee” from Scotia Bank for a card no one takes.

Jon Powers says:

Bad News Folks!

They have been terminating many of the accounts for individuals who have these cards.

I have been asked many times to increase my limit and have declined the offers of over $5,000.00 and more each time.

I just a letter with explanation that because I stuck with the same limit;

I got my card of over 10 years cancelled as of Sep 30 2016.

So much for being a loyal consumer.

I have been offered many other cards during this time and not picked them up.

I don’t want too much debt!

How many more people did they do this too?

Please post!

Adena says:

This news is especially hard on those who used the Sears card for travel through Sears travel as there is no longer a finance option, which means that travel sales will drop significantly, as well as sales for appliances and furniture, and people will go to the Brick or Home Depot who both offer financing options. Very unfortunate, I hope they are able to find a new partner.

GreedyRates says:

Hi Adena,

Completely agree. However, before they work on finding a new partner, I think Sears Canada has to make sure they survive as a retailer. That uncertainty, is probably one of the reasons preventing them from agreeing to terms with a sales finance partner. It’s a little bit of a vicious circle.

GreedyRates Staff

Mike says:

Has Scotia confirmed they will not continue use of the Marriott card? We use this exclusively in the US and for US purchases, its been a great card from Chase, saved us a TON on the exchange fees, and free hotel once a year to boot, cant go wrong. Ugh, I lost my Delta World card from Capital One, now this.

GreedyRates says:

Hi Mike,

Scotia has only acquired the accounts from the Sears MasterCard and store card portfolio as of this writing. They are converting those cards to Scotia branded credit cards. They have not bought the rest of the Chase portfolio i.e. Marriott or Amazon.

Best,

GreedyRates Staff