| Need a credit card? No problem! And
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| | managers, but the credit card industry
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| that's exactly the problem. In a nation
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| | finds a way to profit from these most
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| where instant gratification is touted as
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| | needy of borrowers.Unlike "secured"
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| a virtue, credit is available to anyone
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| | credit cards, cards offered to subprime
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| no matter what their credit history.
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| | borrowers require no security deposit.
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| This is causing personal and financial
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| | Credit limits start out very low --
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| problems for many consumers who abuse the
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| | initially in the $100 to $500 range.
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| easy availability of credit and find
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| | However, fees can be hundreds of dollars
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| themselves unable to pay back their
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| | and interest rates can easily soar to
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| loans.There was a time in history when
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| | usurous rates of 30% or more.The industry
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| extensive credit was available only to
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| | also offers "secured" credit cards to
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| the aristocracy, and debt carried a
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| | offer high-risk customers. Borrowers are
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| social stigma for anyone else. The poor
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| | required to pay an up-front security
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| and middle class were carefully
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| | deposit from $99 to $5,000 to serve as
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| scrutinized when they applied for loans,
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| | collateral in case of default.Many social
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| and debtor's prison awaited those who did
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| | and business commentators have denounced
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| not repay their debts.Americans are more
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| | the subprime lending business for
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| indebted than ever in the nation's
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| | exploiting the poor, comparing the
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| history. The amount owed on loans for
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| | industry's problems to depression-era
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| cars, homes and credit cards adds up to
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| | banking scandals. Lenders take on poor
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| nearly 100% of annual after-tax income,
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| | and desparate customers at their own
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| according to a report in Business Week
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| | risk, writing off losses in the 15% to
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| magazine. Yet, according to the Consumer
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| | 17% range, versus the average industry
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| Fedaration of America, this alarming
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| | loss rate of 6.5%, according to CardWeb.
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| level of indebtedness has not deterred
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| | The delinquency rate among subprime card
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| the moneylenders: credit card companies
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| | issuers is 10%, twice as high as the
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| have more tha $3 trillion of unused
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| | industry average. Some credit card
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| credit lines up for grabs, approximately
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| | companies, such as NextCard, have been
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| $30,000 per
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| | unable to recoup their losses and have
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| American family.According to Fair, Isaac
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| | closed up shop.According to many pundits,
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| and Co. (FICO), the average consumer has
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| | the American economy has been thriving in
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| access to $12,190 on all credit cards
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| | the past 5 years, with a steady growth in
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| combined. Not everone is a spendthrift:
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| | the GDP. However, 90% of this growth has
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| more than half of cardholders use less
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| | been due to the housing bubble; real
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| than 30% of their total credit limit.
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| | wages have declined by 4% since 2000
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| However, one in eight is using 80% or
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| | while health costs have risen by 40%.
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| more of their credit limit, and 1 in 10
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| | Middle and lower class Americans are
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| have a total debt greater than $10,000.
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| | becoming increasingly financially
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| estimates that 20% of American credit
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| | squeezed and unable to pay their debts.A
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| cards are maxed out.There are specialized
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| | record number of 1.3 million cardholders
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| credit cards being offered to all kinds
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| | filed for bankruptcy in 2004. In
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| of borrowers, from students to small
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| | response, the credit industry lobbied
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| business owners. Each demographic group
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| | successfully for stricter bankruptcy
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| is targetted with a specific sales
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| | laws. However, according to the Consumer
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| pitch.People with good credit ratings can
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| | Federation of America, the increasing
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| easily access lines of credit at an
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| | incidence of loan defaults did not spur
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| interest rate of 5% or less over the
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| | the card companies to become more
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| current prime rate, and such applicants
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| | discriminating in their choice of
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| are also qualified for Platinum credit
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| | customers. In fact, they actually
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| cards. However, about half of cards in
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| | boosted their promotional campaigns to a
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| circulation are Gold cards, which require
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| | record 5 billion solicitations (
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| just $10,000 in annual income for
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| | approximately 50 per American household)
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| qualification.The credit industry uses
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| | compared to 3.5 billion the previous
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| credit scores to divide potential
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| | year, many of these ads targeting the
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| customers into "prime" and "subprime"
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| | sub-prime market.Now consider the debit
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| markets, referring to the prime interest
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| | card: it is decorated with the Visa or
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| rate set by banks. Elite borrowers can
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| | Mastercard emblem, and has all the
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| obtain a line of credit on a Platinum
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| | functions of a credit card in that can be
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| card at an interest rate around 12%. A
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| | used at a cash register and for internet
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| Gold card carries an average interest
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| | and telephone purchases. However, it
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| rate of 15%, while a standard credit card
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| | takes money directly out of the
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| charges rates around 17%.
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| | cardholder's bank account and allows no
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| Then there's the subprime market, which
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| | more spending once the account is empty.
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| first emerged in the 1990s, dealing with
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| | A debit card has no monthly fees and no
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| consumers whose credit scores are 500 or
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| | interest charges, and no chance of
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| less, little or no credit history, those
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| | getting into debt. Perhaps this is the
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| emerging from bankruptcy and anyone with
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| | best consumer solution to a credit-mad
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| an inconsistent performance in managing
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| | economy.J Shipper is interested in
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| credit. These people are often low
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| | credit.
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| income earners and/or poor money
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