Credit-Card Issuers Circling Subprime Borrowers Again

[Barefootsies]

NEW YORK (Dow Jones)--Credit-card issuers are knocking on the doors of subprime borrowers again as they look for ways to grow their business amid stiff competition.

The move is part of a broader effort by banks to lure more credit-card customers after many lenders retrenched from the subprime market. A surge in losses from soured loans during the recession and a regulatory overhaul prompted many of the largest credit-card issuers to focus exclusively on borrowers with the best credit.

To be sure, banks' return to subprime credit cards represents more of a baby step than a full-on race. By and large, issuers are still approaching the market with caution, offering those customers small credit lines and charging higher rates, analysts said.

But experts anticipate the trend will accelerate, barring a double-dip recession. And the latest industry data bear this out.

Banks issued 5.4 million new credit cards to subprime borrowers through June, up 64% from a year earlier, according to the most recent data from credit bureau Equifax. The company defines a subprime borrower as having an origination risk score--a proprietary definition--of less than 660.

While the number of subprime cards pales in comparison to the 14.7 million that banks issued in the first half of 2007, their growth outpaced the 27% year-over-year increase in total credit cards issued through June of this year.

Banks "want to grow and you can't grow if you're only lending to super-prime and prime customers all the time," said Michele Raneri, vice president of analytics at Experian, one of the three major credit bureaus. "A normal strategy is to look across the risk spectrum and to lend to as many consumers as you can, and so they've started to pull back from this flight-to-quality strategy a little bit."

FULL ARTICLE

[icymelon]

hopefully they buy porn as soon as the card comes in the mail

[Barry-xlovecam]

Were else can you charge up to 29%?

WSJ Prime Rate 3.25
Federal Discount Rate 0.75
Fed Funds Rate (Current target rate 0-0.25) 0.25
11th District Cost of Funds 1.316

[epitome]

I thought we already established today that the bank is never the victim and its always the consumer that fucks the bank... and a bank would never get in bed with a risky borrower? ;)

[porno jew]

fuck these parasites. seriously.

[$5 submissions]

Originally Posted by icymelon

hopefully they buy porn as soon as the card comes in the mail

[will76]

Originally Posted by porno jew

fuck these parasites. seriously.

idiot, the more credit cards these people get the more sales we can make. Wait you don't make sales anyway so wont care.

I am all in favor of giving everyone a credit card since all of our sales come from credit cards.... doesn't take a rocket scientist to figure out that this is a good thing for business.

[DWB]

Anyone know how I can invest in spinning car rims?

[spunky99]

so how come the people cant take responsibility for their own actions? who cares if the banks are offering credit cards.. dont take one.. get one in the mail? cut it up.. use it responsibly if you want.. but dont blame everyone else for your own mistakes

[will76]

Originally Posted by spunky99

so how come the people cant take responsibility for their own actions? who cares if the banks are offering credit cards.. dont take one.. get one in the mail? cut it up.. use it responsibly if you want.. but dont blame everyone else for your own mistakes

because no one wants to take responsibility for their own actions any more. They want to point the finger at someone else and blame someone, anyone, but themselves. They keep getting rewarded for doing it. People get bailed out, hand outs, they come up with new a new medical disorder every day to excuse someone's behavior for cheating, lieing, slacking, being lazy, hurting someone, getting fat, etc etc etc. If people can't blame someone else then the blame some "disorder" that they can't control to why they are the way the are.

No one takes responsibility for their actions any more. No one mans up and holds themselves accountable. It is the main reason why the US and the world is going to shit. Turning into a bunch of misfits and unproductive losers that expect everything for free and nothing is never their fault.

oh and it's cool to hate on the rich now too.

[Tempest]

Originally Posted by will76

idiot, the more credit cards these people get the more sales we can make.

More short term idiocy...

[Barefootsies]

Originally Posted by spunky99

so how come the people cant take responsibility for their own actions? who cares if the banks are offering credit cards.. dont take one.. get one in the mail? cut it up.. use it responsibly if you want.. but dont blame everyone else for your own mistakes

I guess they had realized there is only 'so much' money they can make on the responsible, and need more reckless credit card customers to "grow".

[porno jew]

Originally Posted by Tempest

More short term idiocy...

yes. if no one can make the connection between predatory lending practices and they economic crisis they are a fucking moron.

[Harmon]

Well, it makes sense. People with great credit make banks little to no money/profit after all is said and done. Subprime (risky) credit and loans are the only way to make profits skyrocket.

If you were a bank and could give a mortgage to a guy at 4% or 10%, well... of course a 10% interest rate is better than a 3 1/2 or 4. Same thing with cards. No risk, no reward

[Emil]

Originally Posted by will76

idiot, the more credit cards these people get the more sales we can make. Wait you don't make sales anyway so wont care.

I am all in favor of giving everyone a credit card since all of our sales come from credit cards.... doesn't take a rocket scientist to figure out that this is a good thing for business.

???????????? Is he for real?

[spunky99]

Originally Posted by Barefootsies

I guess they had realized there is only 'so much' money they can make on the responsible, and need more reckless credit card customers to "grow".

then fuck em.. if u cant be responsible, then fuck up your life.. but i guess it was the governments fault.. or big banks fault.. or evil wall street.. not the person who bought shit they didnt need

[sperbonzo]

Originally Posted by porno jew

fuck these parasites. seriously.

Absolutely. We should simply make it a law that people with bad credit can't have credit cards.....

Of course then people will say that is discriminatory against those people, so then we will make it a law that no one can have credit cards at all......

but this will kill a lot of businesses, so then we will make a law saying that everyone must be given a credit card no matter what, and all at the same rate, (in order to make it fair).....

but then a lot of people will spend too much and not be able to pay their debts and then the credit card issuers will go out of business, (as many have), and no one will want to invest in opening a new credit card company since it will be all risk and little profit, so then card issuers will disappear, and we are back to square one....

Maybe we could have the government control what each of us is allowed to spend, and what we are allowed to spend it on..... OR WE COULD JUST HOLD ADULTS RESPONSIBLE FOR THEIR OWN ACTIONS REGARDING HOW MUCH THEY SPEND AND NOT SCREW IT UP BY MAKING SILLY LAWS WITH UNINTENDED CONSEQUENCES, WHICH HAPPENS ALL THE TIME.....

(Look at the results of the Durban amendment, which capped swipe fees paid by merchants, and then caused those fees to be passed to consumer's instead.... meanwhile the merchants didn't "pass the savings on to the consumer", did they?)







.

[Barefootsies]

Originally Posted by sperbonzo

Maybe we could have the government control what each of us is allowed to spend, and what we are allowed to spend it on..... OR WE COULD JUST HOLD ADULTS RESPONSIBLE FOR THEIR OWN ACTIONS REGARDING HOW MUCH THEY SPEND AND NOT SCREW IT UP BY MAKING SILLY LAWS WITH UNINTENDED CONSEQUENCES, WHICH HAPPENS ALL THE TIME.....

.....and businesses, insurance companies, wall street, banking institutions, global corporations, should not be held to that same "standard" in regards to your new proposed law of self discipline, responsibility, and fiscal management right?

A government going broke legislating responsibility of individuals. Priceless.

[sperbonzo]

Originally Posted by Barefootsies

.....and businesses, insurance companies, wall street, banking institutions, global corporations, should not be held to that same "standard" in regards to your new proposed law of self discipline, responsibility, and fiscal management right?

A government going broke legislating responsibility of individuals. Priceless.

Absolutely. All business are composed of, and run by individuals, and they should all be responsible for their own actions. There should NEVER have been any bailouts, of banks, of unions, of any kind of business! PERIOD

.

[woj]

Originally Posted by sperbonzo

Absolutely. We should simply make it a law that people with bad credit can't have credit cards.....

Of course then people will say that is discriminatory against those people, so then we will make it a law that no one can have credit cards at all......

but this will kill a lot of businesses, so then we will make a law saying that everyone must be given a credit card no matter what, and all at the same rate, (in order to make it fair).....

but then a lot of people will spend too much and not be able to pay their debts and then the credit card issuers will go out of business, (as many have), and no one will want to invest in opening a new credit card company since it will be all risk and little profit, so then card issuers will disappear, and we are back to square one....

Maybe we could have the government control what each of us is allowed to spend, and what we are allowed to spend it on..... OR WE COULD JUST HOLD ADULTS RESPONSIBLE FOR THEIR OWN ACTIONS REGARDING HOW MUCH THEY SPEND AND NOT SCREW IT UP BY MAKING SILLY LAWS WITH UNINTENDED CONSEQUENCES, WHICH HAPPENS ALL THE TIME.....

(Look at the results of the Durban amendment, which capped swipe fees paid by merchants, and then caused those fees to be passed to consumer's instead.... meanwhile the merchants didn't "pass the savings on to the consumer", did they?)

.

well said...

it's shocking that you and maybe only 3 other people on this business board have any grasp of economics/finance/etc...

[Barry-xlovecam]

Simple solution -- enact variable federal credit card usury rate laws. 12 points over the published prime rate or LIBOR?

"Conscionable Rate Lending Act"

Of course, this is not going to happen any time soon in America -- we let almost anyone have a loaded rifle or shotgun so why shouldn't everyone have a credit card?

There is no risk when the government will bail your bank out because your high rate credit card portfolio had too high of a default rate -- you are too big to fail. There needs to be idiot control in this world. Without that, we will never get out of the mess we are in and are only destined toward a bigger mess in the future.

Also, I can't afford the chargeback rates these "risky high rate" credit cards are bound to produce.

[TheDoc]

Is it really such a hard concept to understand that not everyone is going to be responsible? Being so, wouldn't it mean "you" should be responsible and finally accept the facts that not everyone in a society is, perfect like you?

Where is the logic in not accepting the facts, and adjusting for them? How is it logical to absorb the extra costs of these people, after they've been abused, it's not cheaper to let them die or forget about them, that is a lie...


Banks make these loans because they are ALL 100% backed! They don't care if it's bad or not, they do not lose money on it, EVER!


So some of you are okay with them, purposely screwing 'each of us' over because they took advantage of stupid people? We pay for it either way... it could be far cheaper for each of us, if we stopped the fraud before it happened.

[wehateporn]

The bank's ideal targets are people who stay in plenty of debt but pay up all of their minimum payments. They don't like people who eventually expload i.e. bankrupts and they don't like people who pay off their debts; they want you sitting there in debt paying the interest.

A buddy of mine who had never been in debt before couldn't understand why the banks wouldn't give him a credit card, he thought he should have a better credit rating than someone who had been in debt for many years. He hadn't worked out that a person's credit rating is a gauge for the banks to see how likely it is they can profit from a person.

[woj]

Originally Posted by TheDoc

So some of you are okay with them, purposely screwing 'each of us' over because they took advantage of stupid people? We pay for it either way... it could be far cheaper for each of us, if we stopped the fraud before it happened.

What do you propose to stop this "fraud"?

[Barry-xlovecam]

I suppose that if I hand a loaded shotgun to the village idiot that would not be an unconscionable act?

[Barefootsies]

Originally Posted by wehateporn

A buddy of mine who had never been in debt before couldn't understand why the banks wouldn't give him a credit card, he thought he should have a better credit rating than someone who had been in debt for many years. He hadn't worked out that a person's credit rating is a gauge for the banks to see how likely it is they can profit from a person.

That is true.

Years ago, before I had bought a house, I went to one of those mortgage brokers. My truck had been paid off a few years, I had no credit cards, only real credit line was a student loan. If I needed to use a credit card, I had my debit card. Otherwise, I paid for everything else cash. She told me, that I needed more credit lines, a minimum of two, and maybe up to 4 (no more than 10), before I really would be in an ideal position to apply for a mortgage.

I was shocked at the time. I would have thought someone with no debt would be a better candidate, but she said that simply is not true. They want a decent number of credit lines to show payment history over time. Essentially, you have to be in debt (to some degree) for the banks to give you serious considerations on some types of loans.

In hindsight, it makes some sense. But when you look at it on face value, kinda fucked.

[Rochard]

This is where the money is. Big risk, big money.

[TheDoc]

Originally Posted by woj

What do you propose to stop this "fraud"?

Lots of things they could do....

They could make banks, directly responsible for the credit they give out.

They could lower the banks loan ratios.

Or they could simply make it as tough to get credit as it used to be not long ago.


Whatever the solution is, it does not involve creating more fake, bloated, credit marks to prop up markets and industries, that always create false product demand/growth, thus when the credit market dries up, the damage is much worse to the overall economy.

[GetSCORECash]

Originally Posted by icymelon

hopefully they buy porn as soon as the card comes in the mail

Exactly!

[woj]

Originally Posted by TheDoc

Lots of things they could do....

They could make banks, directly responsible for the credit they give out.

They could lower the banks loan ratios.

Or they could simply make it as tough to get credit as it used to be not long ago.


Whatever the solution is, it does not involve creating more fake, bloated, credit marks to prop up markets and industries, that always create false product demand/growth, thus when the credit market dries up, the damage is much worse to the overall economy.

I'm not sure if any of your suggestions are really practical now, but I agree, when the economy becomes a bit healthier we should look into some ways to tighten up the credit a bit or similar credit bubble will be created in a few years again...

[will76]

Originally Posted by Emil

???????????? Is he for real?

Why not. About 3 years ago the credit card companies slashed millions of people available balances, leaving them with maxed out credit cards and unable to make purchases. These tight restrictions have hurt our industry just as much if not more than any other factors like tube sites. Why would it be bad for the credit card companies to lax their restrictions again and start giving people more credit.

Stupid people do stupid things, if they going to blow their wad they going to do it whether i like it or not. I might as well make some money from the situation.

[MrBottomTooth]

Originally Posted by will76

Why not. About 3 years ago the credit card companies slashed millions of people available balances, leaving them with maxed out credit cards and unable to make purchases. These tight restrictions have hurt our industry just as much if not more than any other factors like tube sites. Why would it be bad for the credit card companies to lax their restrictions again and start giving people more credit.

Stupid people do stupid things, if they going to blow their wad they going to do it whether i like it or not. I might as well make some money from the situation.

What happens to your business in a few years when the process has repeated itself once again and the economy has been crippled even further? OK if you plan on retiring soon I guess.

[will76]

Originally Posted by MrBottomTooth

What happens to your business in a few years when the process has repeated itself once again and the economy has been crippled even further? OK if you plan on retiring soon I guess.

opposed to the way it is no now where none of these people have cards?

Sorry don't follow the logic.

Let's say 100 million people have credit cards right now. They do nothing, 100 million people have card now and in the future. VS they open it up now and allow 50M new people to have cards, so now and for the next couple years 150M have cards, those 50M people burn through the cards and max them out, in 2 years we back to the original 100M "responsible" people.

Option A, nothing changes.
Option B, we at least get surge of sales till these new idiots max out their cards.

People running up more credit card debt isn't going to cripple the economy, if anything it will give a little boost to the ecomony as more sales will be made from the money being spent by these people. The GOVT running up debt into the trillions is what is hurting the economy and US dollar. Eventually the whole consumer credit market might collapse but we a long ways away from that and several future bail outs. Hell it might not even happen in my lifetime. The worst that would happen here is the idiots they give more cards to would max them out , default, and they wouldn't be able to use their card any more. back to status quo.

And yes I do plan out getting away from relying on online credit card sales in the not so far future.

[BlackCrayon]

they want to grow...yeah its false growth.