Bank of America (B of A) has stirred up a great deal of controversy recently with its decision to offer credit cards geared toward the U.S. growing immigrant population. B of A is making it possible for applicants without a social security number to qualify for one of their credit cards. In order to receive the card, applicants may utilize a pre-approved identification card, such as a state ID or national ID card, but can avoid the traditional credit card checks most of us are accustomed to. Instead, anyone with a checking account, ID card and no recent history of writing a bad check can qualify for these new cards.
Nonetheless, the second largest bank in the United States is planning to pilot the program in 51 of its Los Angeles branches after a smaller scale pilot proved to be a success. In most cases, applicants will be asked to place a deposit on the card in order to guarantee payment. They will also be hit with high interests rates of 21% or more and the cards offer a $500 limit.
Bank of America states that the program is designed to help immigrants build credit. But, some wonder if this program is exploiting immigrants rather than helping them. In addition, critics are worried whether or not this practice is even legal since an immigrant without a social security card may very well be in the country illegally. According to one report, even the Department of Homeland Security referred to the move as “problematic.” In addition, allowing a consumer to open a credit card account without a social security card seems to open up the possibilities when it comes to identity theft. After all, it sure makes it a much easier to open an account if there are no social security or credit check requirements.
However, this is obviously a market that has been underserved in the U.S. and Bank of America is simply doing what pure market economists would describe as “finding a need and filling it.” Ah yes, capitalism at its finest.
Understanding the implications of marketing to this sort of demographic, I’m confident that Bank of America has considered all of the possible pitfalls and has created a plan to deal with any contingencies.
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