National Financial Awareness Network, Inc.
National Financial Awareness Network, Inc.

Creditors Target Subprime Borrowers, Bankruptcy Filers

More credit card companies are marketing specifically to low income consumers, consumers with poor credit and people freshly out of bankruptcy, which the National Financial Awareness Network claims is irresponsible lending.

Columbia, MD, November 07, 2007 --( National Financial Awareness Network President John Janney is concerned credit card companies are targeting subprime consumers and bankruptcy filers to get them back in the cycle of debt.

Janney expressed concerns over marketing research showing a 41 percent increase in direct mail credit card offers to subprime consumers and a simultaneous 13 percent decrease in offers targeting consumers with great credit. Mintel International Group compared research results from the first six months of 2006 and 2007.

Subprime consumers are consumers with low credit scores. Creditors justify charging high interest rates to these consumers because they claim that subprime borrowers are more likely to make only the minimum monthly payment and are also more likely to make late payments. Such customers make the credit card companies more money than borrowers who pay off their balances at the end of the month.

“Creditors profit greatly by financially punishing consumers who are already struggling with their finances,” Janney explained. “These credit card companies are not helping someone repay a debt when they raise their interest rate after one late payment; the companies only help themselves to a greater share of what little money these consumers have at the end of the month.”

Janney said the credit card industry hooks financially stressed consumers into a never-ending cycle of debt, which is behavior that borders on predatory-style lending. He said that the increase in direct mail credit card offers to subprime borrowers misleads them into thinking they can afford the high interest rates commonly linked to subprime accounts. He also disputes the claim that post-bankruptcy credit card offers are intended to help these consumers rebuild their credit.

“Credit card companies target post-bankruptcy consumers because they know that these consumers cannot file bankruptcy again for eight years, thanks to the 2005 bankruptcy law,” Janney explained. “Creditors can make easy profits by financially punishing post-bankruptcy and low income consumers with outrageous fees and interest rates that these consumers cannot afford.”

Consumer advocates warn borrowers against credit card accounts that include universal default clauses that give the credit card company the right to increase the interest rate at any time for any reason. Other troubling practices include two-cycle billing and shrinking grace periods.

About NFAN:

The National Financial Awareness Network, Inc, is a financial literacy company that offers educational products and services related to personal finance, such as the popular Do-It-Yourself Debt Settlement Kit, at The New York State Banking Department lists NFAN’s in their Financial Educational Resources Directory. For more information, please visit their website at

National Financial Awareness Network, Inc.
John Janney