Credit Card Center Advertiser Disclosure†
04-11-2012 06:35 AM
This article today in the New York Times:
04-11-2012 06:37 AM
It truly is a vicious cycle, isn't it? And there will be those who didn't learn their lesson from 2008 and be doomed to repeat their past mistakes. It's unfortunate.
Follow my financial journey: http://www.frugalrican.com
04-11-2012 09:01 AM
Interesting that it mentioned JP Morgan Chase as tiptoeing into the subprime market. I'll have to keep an eye out, I haven't seen much of this yet.....
04-11-2012 09:58 AM
So many thoughts came to my mind when reading the article and the comments about it after the article.
What I will say is that everyone deserves a second chance in the credit world and the fact that banks are willing to lend to ask risk borowers is a good thing. By keeping CLs low and interest rates high, that helps to mitigate risk and offset the costs for everyone.
04-12-2012 06:16 PM
People want/need a fresh start after setbacks and lendors are going to capitalize on that fact.
04-12-2012 11:32 PM - edited 04-13-2012 01:26 PM
The credit crisis was mostly on mortgage-backed security defaults, credit cards were still profitable by and large; however, CL's and accounts were slashed since they count against the metrics that Federal Reserve requirements are calculated off of (pretty certain of that fact at least) and everyone was hurting for cash to meet their mandated reserve.
I've worked for enough lenders which have historically dealt with subprime borrowers and there is tremendous money in that market space. Capital One did just fine during the downturn. Nothing new in this article, everyone wants a slice of the pie now that people have realized that. Like anything else though there's different tiers of subprime, and some cases you do have to charge quite a bit, especially when you're dealing with 30% default rates in some strata.
People tend to cry about predation and other things such as this article espouses; however, credit plays an increasing role in all of our lives... even I've realized that I can't continue a cash-based existence. So in this case, subprime lending is a good for America thing; however, you can't expect them to do so without making some money... unless we want to have to bail them out, again. I didn't understand that (edit: the rationale for the Bailout) the first time personally.
That said, I don't know the rates / fees some of these companies are charging, but do we really think it's the same level as FP or Credit One? I'd certainly take a card with JPM or Chase as a subprime person over either of those two.
Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.