Subprime Credit Offers Up as Recession Wanes

A New Jersey pastor garnered national attention recently when he collected unsolicited credit card offers from his congregants, put them in a vessel, and set them on fire in front of the church. In doing so, he likened debt to slavery and implored his congregation to think seriously before taking on new credit card debt.

The pastor’s reaction may have been extreme, but it illustrates a valid point: debt can be dangerous if it is not handled carefully. Credit card companies aren’t looking out for anyone’s best interest but their own.

A lot of experts blame the recent economic crisis, in part, on easy access to credit. In their quest for profits, many companies offered unreasonable amounts of credit to borrowers who weren’t in a position to pay it back. When borrowers missed a payment, interest rates skyrocketed. This type of unmanageable debt pushed millions of Americans into bankruptcy.

As credit markets tightened in the recession, these offers started to dry up. Many hoped this would be a permanent change. Unfortunately, it appears that Americans’ mailboxes are once again becoming flooded with offers of fast and easy credit.

According to a recent New York Times report, credit card companies issued 1.1 million new credit cards to Americans with damaged credit in December 2011. This was a 12.3 percent increase over the previous year.

It may seem counterintuitive to some that credit card companies would target those borrowers who are least able to pay off their debts. However, these borrowers often generate more income for credit card companies in the form of late fees and interest charges.

Although a certain amount of debt is a fact of life, it’s important to use it carefully. If you do find yourself overwhelmed by unmanageable credit card debt, filing for bankruptcy may be the best solution.

Source: Deseret News, “Exercise Restraint When Confronted With Credit Card Offers,” May 1, 2012.

Related Posts: CARD Act helping consumers avoid, understand credit card fees, Stats point to signs of improvement in U.S. credit card debt, Keeping debt solution options in perspective, Can understanding credit cards can help people avoid debt?

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Attorney Joel R. Spivack is an experienced bankruptcy and residential real estate transactions lawyer in Cherry Hill, New Jersey. Clients come to us for legal services, but what we really provide is peace of mind. For more than 30 years, Attorney Spivack has helped people make wise, informed decisions about bankruptcy filings, debt relief options and residential real estate transactions.
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