In just another example of banks targeting high-risk groups, those with bad or no credit, Bank of America is discreetly offering credit cards to people without Social Security numbers, reports the Wall Street Journal today. Now, before my knee-jerk reaction, that this is a really dirty and exploitative moneymaking scheme, gets away from me, I think it's important to consider the positives.
Undocumented immigrants, the obvious target of the new offer (the majority of people in the U.S. who don't have a SS number are illegal immigrants), deserve options for credit as well. It is harder to buy a house, car and really, anything big without credit, and as the WSJ points out, illegal immigrants have "typically relied on loan sharks and neighborhood finance shops for credit." So potentially, this could be a good advancement. Unfortunately, Bank of America's lending scheme appears to be just another example of high-risk groups being taken advantage of.
Illegal immigrants have to pay an upfront fee to obtain Bank of America's Visa card and the interest rate on the card, surprise, surprise, is "unquestionably high," according to a researcher for the Nilson report, a group that puts out newsletters on consumer payment systems. Salon blogger Andrew Leonard, notes, sarcastically, that anti-immigration activists should be shouting from the rooftops, because immigrants' money will no longer be flowing across the border in the form of remittances, but rather staying right here in the U.S. of A.
It's a tough time for banks. Historically they have raked in profits by simply buying other banks, but consolidation regulations are tightening and banks are forced to look for other lucrative avenues. It's really no wonder Bank of America would look to give credit to an untapped population whose financial stability is not guaranteed, one that probably has no idea that the average household that makes less than $35,000 has credit card debt of $4,000.
Higher standards, huh?