Credit Card Lending to Sub-Prime Customers Climbs 41 Percent in One Year

Credit Card Lending to Sub-Prime Customers Climbs 41 Percent in One Year
May 16, 2012

Credit card issuers are once again aggressively pursuing sub-prime customers.

The National Consumer Credit Trends Report from credit-reporting firm Equifax shows that lending to sub-prime borrowers rose 41 percent in 2011 compared to year-ago levels. In addition, 1.1 million new bank cards were issued last year to sub-prime borrowers, a four-year high.

The growth in the sub-prime category was much greater than the overall bank credit card growth of 18 percent in 2011.

Highest Since 2008

New sub-prime card limits grew 55 percent for the period to $12.5 billion, the highest level since $27.4 billion in 2008.

"After the crash in 2008, banks slammed on the lending brakes and only people with excellent credit scores could get new credit," says Bill Hardekopf of LowCards.com.

"This growth in borrowing and lending at all levels could be a good sign for the economic recovery. A significant number of borrowers have paid down their balances and reduced credit card debt to become a better risk for lenders. Regulations have also hammered the issuers' ability to generate revenue, and the banks are trying to find new ways to grow.”

-- Staff report