Sunday, April 15, 2012

Lenders set out to woo risky borrowers

As my husband and I sat quietly ready the Sunday paper drinking our coffee he suddenly said "here they come again, just like you said".  I looked up over my reading glasses "who?" I asked.  He flashed me an article in Sunday Money of the Salt Lake Tribune,  Banks are getting back in the business of extending credit to risky borrowers.  I've laughed when we get an offer in the mail; I have serious thought, they must not have checked our credit.  I know it's ruined shouldn't they?  Well apparently they do however the article makes it clear they are looking for people like us, people that historically had great credit and then due to the Great Recession had a train wreck.  They can see I've made all the car payments on time as well as my one credit card American Express.  By the way the only card that did not out right cancel us.  They lowered our limit but kept us as a customer, and will for life because of it.  What the banks are looking to do is make up billions in fee income wiped out by new regulation--example on these cards, 29% interest.  And car loans, there is no regulation on car loans so they are starting to offer those too.  Mark my words the mortgage industry, at some point, will jump back on board.  There is simply too much money for the banks to make by encouraging people to borrow.  In December 1.1 million new credit cards were issued to people with damaged credit and auto loans were up 23% to those same type of folks.  DON'T get sucked back in, just don't do it.  If you are trying to re establish credit use it sparingly and pay if off monthly.  The banks are not your friend, they are not trying to be understanding or kind---they are trying to make money by putting people back in debt with excessive interest rates and fees.

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