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TheStreet.com TV Recap: Should Target Shed Credit Card Business?

Cramer believes a possible sale of the retailer's credit card business could hurt earnings.

The key to

Target

(TGT) - Get Report

is its credit card, Jim Cramer said on TheStreet.com TV's Wall Street Confidential

Web video Wednesday. "Why are they getting rid of the key to their earnings?" he asked Mark DeCambre, senior writer at TheStreet.com.

"That's a good question, but as you look at the other discounters --

Sears

(SHLD)

,

Kohl's

(KSS) - Get Report

-- those guys have shed their credit card business," answered DeCambre,

who wrote about the issue today.

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At some point, especially at this station in the market, in which there's so much credit dislocation, these retailers have got to think about whether or not they are actually extracting value from their credit card businesses, DeCambre said. They have to think about whether they can unlock value in a business that they probably shouldn't be in to begin with.

Cramer pointed out that when consumers open up a Target credit card account, they get 10% off their first total purchase. That, he said, is something Americans like. "Hasn't it been more than a credit card company," he asked DeCambre. "Hasn't it been a great come-on to do business?"

DeCambre agreed that the offered discount has absolutely been a great way to gain more business. "You can look at the numbers, and the earnings and the revenues show that it's been a great driver for these guys," he said. "So I don't think that they would shed this."

DeCambre believes the retailer is ideally trying to continue to offer its discount deal but transfer the interest rate risk to someone else.

How Target actually ends up monetizing this is probably the key, DeCambre said.

At the time of publication, Cramer was long Sears Holdings.

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