If you're underwater on your subprime mortgage, you've still got friends. Naked Capitalism, by way of the Prudent Investor, points us to a terrific Boston Globe story breaking the news that even as the mortgage mess started accelerating, credit card companies began targeting subprime mortgage holders with a deluge of direct mail offers pitching new credit cards! Because if you can't refinance your way into some quick cash, then pulling out some brand-new plastic is clearly the smart way to go.
As explained by the Globe's Robert Gavin, credit card companies are quite fond of subprime mortgage holders in distress, because they're likely to make only the minimum payments on their bills, allowing the credit issuers to rack up big interest fee windfalls. Direct mail offers to borrowers with good credit, in contrast, are falling, because people who pay off their bills every month are, well, icky.
I guess I should've expected no less from these vultures. On the bright side, does this mean that if I keep paying my bills every month, I won't get as much junk mail from credit card companies? And if true, does that mean these companies accidentally incentivized getting on top of your account balance?
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