After getting all hot and heavy leading up to the recession, then turning completely cold shoulder, credit card companies are once again starting to selectively flirt with subprime borrowers.
MarketWatch reports that banks have issued a brisk 5.4 million new cards to subprime borrowers, defined here by Equifax as people with credit scores under 660, since the beginning of this year
They are doing it tentatively, though. The credit lines are small. The interest rates are high. But issuers are looking at the “meaty” part of the distribution between 620 and 650 and trying to figure out which customers might be “undervalued” in terms of credit score not because they’re bad borrowers, but due to circumstances beyond their control, like losing their jobs.
“The banks and the stand-alone card issuers are under constant pressure to increase earnings and kind of push the envelope,” Ben Woolsey, director of marketing and consumer research at CreditCards.com, told the WSJ.