Credit Card Debt Management

Interesting trend here. UK-based HSBC, having recently dropped all subprime mortgage lending because that division of its American business is “no longer sustainable,” has decided the American subprime market is still worthy of credit cards. Lots and lots of credit cards. Subprimers are statistically more likely to make minimum monthly payments and rack up late payment fees, analysts say.

According to the Sept. 4 edition of The Boston Globe, credit card issuers like Capital One have in recent months drastically ramped up their credit card mailings wooing subprime borrowers. Leading the charge? HSBC, with subprime credit card mailings in the first half of 2007 that more than doubled the number sent out in the same timeframe a year ago.

Meanwhile, Washington Mutual, whose web site boasts an effort “to be a leader in the subprime mortgage industry,” is also scrambling to downsize its subprime mortgage marketing efforts. That company has also increased subprime credit card mailings, by about 35 percent.

At least Washington Mutual claims to be targeting the upper end of the subprime market, consumers with credit scores of 600 or above. Perhaps this is what the company meant when it told the Associated Press earlier this month that it has been “anticipating and preparing” for the subprime mortgage fallout for the last 18 months. The company claimed to have taken “strategic actions” to “weather this market” and “take advantage of growth opportunities.”

Let them all have credit cards! How generous. While credit card companies have been trying so hard to hand out more debt opportunities to subprime consumers, the number of credit card offers they’ve mailed out to those with good credit has decreased significantly, according to the Globe. Makes perfect sense. Washington Mutual, HSBC, they’re all bloodsuckers. You’d think they would have learned their lesson, but there is currently no way for subprime consumers (or subprime lenders) to benefit from mortgage refinancing so credit cards have become a cash cow.

This goes back to what I said in a former post: Never assume that because credit card companies are mailing you offers again, your credit score is improving. There is always an agenda, and consumers must be savvy enough to identify it.