A new report by Equifax shows that the sub prime credit card market seems to be coming back strong, even with questions remaining about the strength of the economy. The report, created in conjunction with Moody’s Analytics states that lending of bank credit cards to sub prime customers increased 41% from 2010 to 2011. Also, this type of lending hit a four-year high in December. Card limits also grew substantially.
The Federal Reserve’s recent report is not as encouraging. It reported that for the second month in a row, revolving credit declined by 3.3% in February and 4.4% in January.
Many blame the reduction in sub prime lending on the new credit card regulations that restricted fees and not on a reduced demand. More fees are possible out of the Dodd-Frank bill and that could be deterring some sub prime lenders. In 2007, before the new regulations, Premier Bankcard issued 250,000 new credit cards a month. It now issues 50,000 new cards a month.