Consumers With Lower Credit Scores Gaining Attention From Card Companies
Credit card companies are looking to drum up new business among consumers with less-than-stellar credit histories. This is a change from the recent past, during which card issuers focused their attentions only upon individuals with near-perfect credit.
After months of making special efforts to court only the most creditworthy consumers, some credit card issuers are changing their tactics and going in pursuit of customers with mid-range credit scores and imperfect credit histories. In fact, data indicated that there were more new lines of credit issued to consumers with spotty credit histories than to those with excellent credit ratings.
TransUnion, one of the three major credit reporting agencies, revealed that 25.2% of new credit card accounts were opened by individuals with a credit score of 700 or lower, an increase from last year’s figure of 23%. Essentially, what this means is that a large amount of credit cards – nearly a quarter of a million – have been doled out to consumers who have had some past struggles with credit.
This new availability of credit for financially-challenged consumers marks a sea change in the industry, as TransUnion reported that last year close to $8 million consumers had abandoned the use of credit, either willingly or because they had their lines of credit revoked. Because during the previous few years opportunities have been scarce for consumers to open up new lines of credit if their credit report indicates any past struggles with credit, many people are currently clamoring for a new account.
Rather than abandoning their pursuit of top-tier credit rated consumers, card companies are instead making their offers for the especially credit worthy increasingly enticing, by amping up rewards programs, extending teaser promotions and slashing interest rates. According to Synovate, a market research firm, around 80% of new card offers are targeted towards consumers who carry top credit scores.
However, data indicates that those upper echelon creditworthy consumers aren’t necessarily in the market to open up new accounts, as they already have plenty of credit available to them.
“If financial institutions are going to grow, eventually they’re going to have to dip their toes into the water of riskier borrowers,” claims one financial analyst, according to The Huffington Post.
This entails issuing cards to consumers who are likely to carry a balance from billing cycle to billing cycle and accrue interest charges.
Latest Credit Card Issuers News
Wells Fargo & Company has recently announced the release of tap-to-pay contactless consumer credit and debit cards. Wells Fargo cardholders are already familiar with the advantages of digital wallets and are involved in paying for purchases and initiating ATM transactions by means of their mobile phones, while tap-to-pay cards are something new.
Dog-lovers can get checks or credit cards printed with pictures of adorable pups. If you’d rather be at the beach, you can carry a credit card picturing the waves and sand. And now sports fans can order a new credit card with the logo of their favorite teams and players.
Loyal JetBlue customers have another reason to use Chase credit cards: the banking giant and credit card issuer has announced that the JetBlue TrueBlue loyalty program is the newest Chase Ultimate Rewards partner, and cardholders will now be able to redeem their reward points for travel on the airline.
Good news for American Express Platinum cardholders who live or travel in the Denver area: American Express has just announced plans to add a Centurion lounge to the Denver International Airport (DIA). And it will be huge—over 14,000 square feet—making it the second-largest Centurion lounge location.
The Walt Disney Company and Chase Card Services recently announced that they will continue their longstanding relationship, extending their co-branded Disney Visa Card, Disney Premier Visa Card and Disney Visa Debit Card programs in a multi-year agreement.