The subprime credit card market has plummeted in the past six years, with credit card issuers in the first quarter sending out just 21 million direct mailings for cards that carried fees and offered no rewards. By contrast, issuers sent out 300 million subprime credit cards in the first quarter of 2007, according to data from Mintel Comperemedia. Industry consultant Raj Date, former deputy director of the Consumer Financial Protection Bureau, says that while part of the contraction is good because some consumers were previously using cards with terms they did not understand, the gap left by subprime cards is leading some customers to take out traditional payday loans, which charge higher fees. Non-traditional startups also see an opportunity to fill the hole with products and programs that aim to lend more efficiently and pass the savings on to borrowers or to improve repayment rates by working with employers or payroll providers. "I would love to see improvements in this arena," says Paul Leonard of the Center for Responsible Lending. "I think we have to assess these companies based on what they actually do, and not early reports of what their intentions are."
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