Bad Credit? You Can Borrow Again — for a Price

Handful of credit cards
Handful of credit cards

Banks just a few years ago were handing out cards and extending lines of credit to just about everyone, a decision that came back to haunt them in a major way when borrowers, beset by job losses and falling home values, began defaulting in huge numbers. Banks battened down the hatches and severely curtailed their lending, extending credit to only the most affluent customers or those with near-perfect credit scores.

Recently, though, it seems that banks are once again engaging Americans with blemished credit. The number of solicitations sent by mail has increased significantly, according to a report in the New York Times. HSBC, Citigroup and Discover are all sending out 10 times as many offers as they did a year ago, while Capital One is sending out 50 times as many. The number of offers going to riskier borrowers has gone up 10 percentage points in only a year, although the number of offers is still much smaller than five years ago. As the article points out, these offers aren't exactly generous; one Capital One card being marketed to people with troubled credit, for example, carries an 18% interest rate and a $50 annual fee.