Interesting Story: SubPrime Lenders

Discussion in 'Credit Talk' started by VJ, Jul 14, 2001.

  1. VJ

    VJ Well-Known Member

    Wanted to pass this story on as it gives a peek at the corporate mindset at Providian and Cap 1 .It starts slow but gets better.
    Interesting Quotes are:

    But now, leading subprime lenders Capital One Financial Corp. (NYSE:COF - news) and Providian Financial Corp. (NYSE:pVN - news) are spending more time and energy pitching to folks with solid or excellent credit histories -- the prime and superprime markets -- instead of the riskier (Sub-Prime)segment.
    The annual percentage rate on ``platinum'' cards, which tend to be pitched at superprime customers, rose to 13.82 percent in the first quarter of the year from 12.11 percent in the first quarter of 2000, said Andrew Davidson, vice president of research firm BAIGlobal.

    The Fed has cut interest rates six times this year, lowering rates by a total of 2.75 percentage points, but credit card companies have not passed on these savings to consumers.
    This growing spread has made the prime and superprime sectors more appealing to credit card lenders. It has also made the business of lending to low-risk customers less profitable, and has diminished the need to go after high-risk communities.

    It also is becoming trickier for issuers themselves to raise money, as investors grow more wary of some subprime debt, which is often pooled together and then resold.

    ``Whatever subprime is, everybody knows they don't want to be it. Even if they are it, they don't want to be called it. And they certainly don't want legislators or regulators calling them it,'' said Moshe Orenbuch, an analyst at Credit Suisse First Boston.

    http://biz.yahoo.com/rf/010711/n0675891.html

    VJ
     
  2. GEORGE

    GEORGE Well-Known Member

    I'M LOW RISK...SO I'M NOT IMPORTANT ENOUGH TO THE CREDIT CARD COMPANIES???
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    It has also made the business of lending to low-risk
    customers less profitable...
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  3. fingrrrl

    fingrrrl Well-Known Member

    Sometimes it's funny though to call Providian a sub-prime lender. True their "lower-end" cards are pretty crappy in terms of interest rates and so but get this:
    Yesterday, I got a card solicitation in the mail from MBNA for their platinum plus card. The APR on it was 16.9% (I have that on my GetSmart classic) and it had no grace period! Can you believe it? A platinum card with no grace period!!! GetSmart's platinum card's APR is prime + 1.9% and has the standard 25 days. So prime is not always so "prime" after all. Just my thoughts...
     
  4. GEORGE

    GEORGE Well-Known Member

    PRIME AND SUB-PRIME IS KINDA' BLURRY...
     

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