The Daily Sandwich

"We have to learn the lesson that intellectual honesty is fundamental for everything we cherish." -Sir Karl Popper

Location: Boston, Massachusetts, United States


Wednesday, September 05, 2007

Loan Sharks: Where the Customer is Our Chum

It's been a real golden age for credit card companies. Record profits, virtual ownership of enough congressmen to guarantee passage of whatever they want, and no shortage of Americans on the hook for plenty of cash. The only thing that would make it better is apparently debtor's prisons. (Please knock on the nearest piece of wood.)

Now that the housing market is looking grim, consumers are facing impossible debt loads, and there's already talk of a massive public bailout of unscrupulous subprime mortgage lenders and greedy banks, that can only mean one thing for civic-minded card issuers: profiteering!

Direct mail credit card offers to subprime customers in the United States jumped 41 percent in the first half of this year, compared with the first half in 2006, according to Mintel International Group. Direct mail offers targeted at customers with the best credit fell more than 13 percent. . . .

The increase in direct mail to subprime customers tracks the slide in the housing market. In June, mail offers to these households were nearly double those of June 2005, near the peak of the US housing market[.]

Please note that this is only a counterintuitive corporate strategy when you're not writing the laws governing debt repayment and bankruptcy.