In the wake of the recession's massive nationwide credit default, banks largely stopped lending to relative risky consumers -- that is, to middle and lower income people who have trouble paying their bills as soon as they lose their jobs or are hit with unexpected large expenses (such as expenses associated with serious illness). Now, the New York Times reports, after a 3-year layoff, the banks are starting to issue credit cards to these consumers again.
Two things about the article stood out. First, reportedly because the new credit card reform law and regulations "limit the ability of lenders to change [a card's] terms after payments are missed," lenders are jacking up interest rates and annual fees at the front end. "Capital One, for example, is offering low-end cards that carry interest rates of 18 percent or higher and annual fees of up to $50." Second, "Citigroup is testing a credit card with training wheels, known as CitiMax, devised for customers whose credit was damaged by the recession. Borrowers are required to link their credit card account to a checking, savings or brokerage account so that Citi can withdraw money if a payment is missed." That's sorta like a combination credit/debit card.
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