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Subprime Credit Card Offers

Subprime Credit Card Offers - For the last two years, its been nearly impossible for subprime borrowers to qualify for a loan of almost any kind. But that's beginning to change as banks slowly return to lending. First up: credit cards.

Consumers with less-than-perfect credit scores are once again targets for card issuers. A growing number of banks have picked up the pace of card offers to the best of of subprime borrowers—typically those with FICO credit scores between 620 and 660. According to credit-card comparison site, CardHub.com, the number of solicitations for cards sent to that group has risen up to 300% since June. Among the most prevalent senders are large lenders like Capital One and HSBC, who say the campaign is part of a bigger effort to provide access to credit to more borrowers.

For subprime borrowers, this is just the beginning. "We'll see more of these offers this year to the cream of the subprime," says John Ulzheimer, president of consumer education for SmartCredit.com, a credit-monitoring web site.

Subprime Credit Card Offers

Before the credit crisis, subprime was an important market segment for banks. They generate more revenue from fees – including late fees and annual fees -- from subprime customers than from more credit-worthy borrowers. And banks charge them higher interest rates, too. Crisis or not, lenders receive, on average, 70% of their revenue from subprime borrowers in fees; prime borrower fee-related revenue stands at 48%, according to R.K. Hammer Investment Bankers, which advises credit card issuers on their cards.

Now, as charge-off rates—money owed that lenders have written off as a loss--and delinquency rates decline (they were at 8.49% and 4.59% respectively, according to third quarter Federal Reserve data, down from highs of 10.9% in second quarter 2010 and 6.61% in first quarter 2009), many card issuers are less worried about continued charge-offs and are returning to risky borrowers as a way to make more money.

Subprime Credit Card Offers
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