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Friday, September 07, 2007

Subprime borrowers - the prime customers of credit card issuers

Read an article at Yahoo.com regarding a 41% increase in the direct mail credit card offers geared towards the subprime customers during the first half of 2007, while the figure for more credit worthy customers dropped 13%!

The subprime customers may be late or defaulting on their mortgages but seems such customers are very profitable for credit card companies as they only make minimum monthly payments and therefore, pay higher interest rates. Of course, such customers are also easy and more vulnerable target, especially now due to greater restrictions in borrowing money.

The credit card companies are doing what they are good at - finding ways to boost their bottom line. In a capitalist environment, I guess, that's what they as well as other businesses are supposed to do. However, as customers, rather than simply blaming the credit card companies, I believe that it is every one's responsibility to become more knowledgeable about personal finance so that each person can make smart decisions about credit card and other offers on their own. Unfortunately, acquiring such knowledge is not always easy due to job, family and other priorities but that's something for which each person should try to make an effort - just my 2 cents.

For complete article, see:

Yahoo.com/Seeking Alpha: Credit Card Companies Increasing Exposure to Subprime Borrowers

posted by Ruby @ 7:09 AM

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