Credit card companies woo struggling mortgage-holders

The Boston Globe reports:

As subprime borrowers began to default on their mortgages in rapidly growing numbers this year, credit card issuers increased their efforts to sign up such customers with tarnished financial histories, according to a market research firm.


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.

Yet, during this same period, defaults on subprime mortgages, which charge higher interest rates because the borrowers' blemished credit makes them bigger risks, rose significantly. In June, nearly 1 in 5 subprime mortgages were at least 60 days past due, and more than 1 in 20 were in foreclo sure, according to First American LoanPerformance, a San Francisco firm that collects and analyzes mortgage data.

Though it seems counterintuitive to extend credit to households already struggling with debt, the meltdown in housing and mortgage markets probably led credit card issuers to boost their marketing to subprime customers, said Julie Lizer, Mintel's manager of custom research.

As home values decline and lenders balk at writing subprime mortgages, these customers can no longer refinance and tap into home equity for cash. That leaves credit cards as their only option, said Lizer.

So the good credit people aren't as popular as the "sub-prime" people.In the old days,leftists used to tell us about redlining of neighborhoods.The old days.The real old days.