Subprime Credit Card

See: Subprime. See: Credit Card.

If you're a bank giving the right to a candidate with virtually no bank account cash, a minimum wage job, and no history of paying bills on time, wouldn't you be nervous about giving them a piece of plastic with a mag stripe on it that lets them buy virtually anything? Well, of course you would. So you'd limit them severely as to how much they can spend before having to pay their billls. Like...think: $1,000 limit. That way, if they go totally Greece on you ("I can't pay my bills!") then you have lost a grand. You're not dead; you'll live to loan another day.

And to make up for the highly likely case that, say, 1 in 10 will default or cause problems, you'll charge them over 20% rates on their credit cards when they do borrow money from you, i.e. when they don't pay off their balance each month.

That's the bad news. The good: many prime borrowers started out as subprime. They paid their bills dutifully on their cards month after month, and established credit and trust, and ended up just fine down the line.

The ultimate: the Black Amex Card. Try not to leave home without it.