Walmart Sues Capital One to End Credit Card Partnership

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

Walmart wants to get out of its credit card partnership with Capital One. See what the retail giant’s lawsuit alleges and what it means for cardholders. 

What happened

Walmart filed a lawsuit against credit-card partner Capital One last week, according to the Wall Street Journal. The retailer alleges that Capital One didn’t meet the terms of the contract, specifically that it failed to replace lost cards promptly, and that it failed to promptly post some transactions and payments to accounts.

A Capital One spokesman denied those allegations and said Capital One resolved those issues pursuant to the terms of the contract. The lawsuit “is an attempt to renegotiate the economic terms of the partnership it agreed to just a few years ago, or end the deal early,” Capital One’s spokesman told the Wall Street Journal.

So what

Capital One became the card issuer for the Walmart credit card in 2019, and the contract reportedly lasts until at least 2026. People familiar with the matter say that Walmart executives wanted to renegotiate terms of the contract, including changing the loss-sharing agreement on chargebacks and getting its own fintech arm involved in issuing cards.

This could end up affecting cardholders if Walmart is successful in its attempt to terminate its partnership with Capital One. In that case, Walmart would most likely launch a new credit card with another bank and send it to all of its cardholders in the mail. Card features usually change during transitions like these, so it’s unlikely that the new Walmart card would have the same benefits as the old one.

This isn’t the first time Walmart has sued a credit card partner. Walmart also filed a lawsuit against its previous partner of nearly 20 years, Synchrony, in November 2018. The circumstances were different there, as Walmart and Synchrony had already decided to end their partnership. Walmart agreed to dismiss the lawsuit a few months later.

Now what

If you have a Walmart credit card, nothing is changing right now. It’s possible that the two companies resolve their issues, or that Walmart’s lawsuit is unsuccessful, and everything continues as normal. If Walmart switches to a new card issuer at some point and launches another card, you’d receive that in the mail to replace your old card.

It’s worth mentioning that store cards like this one tend to be lacking in features compared to what the best credit cards offer. A Walmart credit card, for example, is mainly going to be useful at Walmart. Everywhere else, there are rewards credit cards that earn more back. So, while it might make sense to have a Walmart card if you shop there often, it shouldn’t be your only credit card. Make sure you have at least one other card with more versatile features, such as a cash back card or a travel card.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Synchrony Financial is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.

 Read More