Credit-Card Issuers Vie for Risky Business -- Subprime Borrowers

October 17, 2011
Wall Street Journal  
credit card news

Credit card companies, seeking ways to expand their business amid fierce competition, are returning to high-risk subprime borrowers. Banks issued 5.4 million new credit cards to borrowers with checkered credit histories through June. That is up 64 percent from the previous year, according to recent data from credit bureau Equifax, which defines a subprime borrower as having an origination score of less than 660. While the number of subprime cards issued this year falls well below the 14.7 million issued by banks in the first six months of 2007, their growth outpaced the 27 percent year-over-year in total credit cards issued through June 2011. The move, coming with the subprime-mortgage fiasco still fresh, is part of a larger effort by banks to attract more credit card customers at a time of stagnant economic growth. A spike in losses from failed loans during the recession and a regulatory reform prompted many of the largest card issuers to focus exclusively on borrowers with better credit.
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