Re: Is the Sub-prime Market Growing? (article)
04-03-2012 07:57 PM
- Bank credit cards: Lending to sub-prime consumers showed a 41 percent increase from 2010 to 2011 as sub-prime borrowing hit a four-year high in December 2011 with 1.1 million new bank credit cards issued. New sub-prime card limits grew 55 percent from 2010 to 2011. At $12.5 billion in 2011, bank card limits are at their highest level since 2008 ($27.4 billion). Bank credit card growth continues, but is still well below pre-recession levels. In 2011 39.9 million bankcards were opened, an 18 percent increase from 2010 and the highest total since 2008. The increase in total bank credit card originations was accompanied by a 31 percent rise in total credit limits from 2010 to 2011. They year 2011 marked the first time in more than four years that credit lines increased, reaching $163 billion.
This is scary. Subprime lending already killed everything a few years ago and the banks jump right into it again.
With regards to anything being 'scary.' I think this is different than subprime mortage lending. With subprime mortagage lending that brough the world down, there was a bad assumption on the part of the banks that housing value would never collapse.
With subprime credit card issuing, it's no different than 'pay day loans.' high APR and AF's pays for the risk. They are basically screwing the vulnerable.
Even the worst of the sub-prime credit cards I've seen posted, are nowhere close to the PDL (pay day loan) racket.
When you're subprime, you take what you can get. Sure, some credit products are better than others, but the fact is at least people are starting to lend down to the unwashed masses such as myself, and getting it reported to the bureaus. That's the only way to drag onself out of the muck, thank Christ subprime lending is alive and well.
That's the purely altruistic side, which I can assure you none of the lenders care about. Bottom line, there's lots of money to be made in various subprime products, and most lenders want a slice of the pie.
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