Why Credit Card Companies Solicit Newly Bankrupts
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Even though she recently filed for bankruptcy, Laura Fogle, has been bombarded by new cedit card offers from banks and issuers wanting to lend her money at high interest rates. In the last few weeks she has had unsolicited offers from MasterCard and Citibank to name but a few.
This is nothing new - credit card companies have a history targeting bankrupted people. They think that by enticing them to sign up for a new credit card at inflated rates of interest, they will recoup money from late payment fees and interest that will then be weighed against outstanding debts. Many of the offers from credit card companies are for secured credit cards that require an initial bank deposit, which is then used to pay any outstanding balances.
Credit cards are extremely popular with consumers and even more so with banks and issuers, who sent out more than 5 billion offers last year alone.
“The whole business model of the credit card industry is built around outstanding debt. This is the only industry that calls people deadbeats when they pay all their bills every month.” said Center for Responsible Lending researcher, Ellen Schloemer.