Most of us probably remember the good/bad old days before the financial crisis, when it seemed like anyone with a pulse could get a credit card.
Those days aren’t exactly back, but a new report from SmartMoney says banks are sharply increasing the number of credit card offers they send to people with less-than-stellar credit.
SmartMoney, citing CardHub.com, reports a 300 percent increase in credit card solicitations for subprime borrowers since June.
Those borrowers, who have credit scores of 620 to 660, tend to be among the most lucrative sector for lenders, because they are charged higher fees and also may be more likely to rack up late fees and other expenses.
They tend to be the riskiest for lenders too, because their precarious financial situation makes it more likely that they won’t pay back their debts.
Consumers who take companies up on these credit card offers should be sure to read the fine print. SmartMoney, also citing CardHub.com, says the average interest rate for subprime accountholders is 20 percent, and nearly all them carry an annual fee. The cards also tend to have very low credit lines of under $500.
The financial publication says the most common solicitors of credit cards for subprime customers are large lenders such as Capital One and HSBC, who say they are trying to provide access to credit to more borrowers.
As more banks start offering cards to people with lower credit scores, the question is whether people will go back to the freespending ways that left many drowning in debt.
The financial crisis and recession certainly seemed to be a wake-up call for many. Revolving debt, the measure of American consumer debt that includes credit cards, has fallen for 27 straight months, according to Federal Reserve data through November. But Americans have recently shown more willingness to borrow money for things like cars and college expenses.