The credit card industry has been looking into ways to increase its customer base, giving people who don’t have desirable credit the chance to partake in merchant services transactions.
The Wall Street Journal reports that in an effort to gain a new revenue stream, credit card companies issued 5.4 million new plastic cards in a period that ended in June. While the number is an increase, prior to the financial meltdown its higher than in the recent pat.
“[We] want to grow, and you can’t grow if you’re only lending to super-prime and prime customers all the time,” said Michele Raneri, vice president of analytics at credit bureau Experian, told the news provider. “A normal strategy is to look across the risk spectrum and to lend to as many consumers as you can, and so they’ve started to pull back from this flight-to-quality strategy a little bit.”
While many firms see the lower-credit clients as a new revenue stream, many credit card companies have been seeing a rise in delinquencies. The rate of customers who were 30 days or later in payments at Bank of America rose to 3.99 percent, up from 3.69 percent in August.