Old habits by credit card lenders on a comeback spree
The world reeled under the wave of economic instability just a couple of years ago because of adhoc issuing of credit cards by credit card lenders. These companies issued cards to customers whose credit scores were way below the acceptable limits just to get more clients on board. However, this backfired and the world faced an economic slump. It seems that credit card lenders have not yet learned their lesson.
Banks and other financial institutions have begun issuing credit cards to people with poor credit scores. And this, not in small numbers! Here are some of the startling figures that reveal the fact the credit card companies are back to their old ways.
The highest issuer of credit cards to people with a poor credit history was Capital One with 22 million cards being given out. The second place went to HSB that issues 16 million cards. The third and fourth places were occupied by Citigroup and Discover respectively that issued 14 million and 10 million cards each.
In the current fiscal year, over 2.5 billion consumers will get that important credit card. It is estimated that over 17 percent of the people who will be issued credit cards are the ones with bad credit history.
When the lenders were questioned about the change in the mindset, this is what they had to say. Most of the lenders felt that it was unemployment and dropping real estate prices that led to an increase in the number of people with poor scores. Hence, they are willing to take the risk and go ahead with issuing cards to people in this category, albeit at a cost. The price that the consumers have to pay for this is definitely higher than that of regular cards.