,
6 tweets,
2 min read
Read on Twitter
I am actually glad this product exists; secured cards are very useful for getting adults onto US credit infrastructure and they’ve largely disappeared as a marketed offering from banks with good distribution, so you previously had to call around to find a place that would do them
It was very literally my job at one point to get (mostly Japanese) professionals onto US financial rails, and you want to set someone up in such a way that they can pass a credit check to e.g. rent an apartment.
The other majority case for this is someone who is newly financially independent, which is common for e.g. people who have recently moved away from parental support, divorced, etc.
If you’re curious why secured cards disappeared: the underwriting standards for unsecured cards ate most of the market for them. Back in the day getting your first credit card was actually pretty hard for almost everyone.
That stopped being true in about the early 2000s as banks loosened underwriting standards and found that, even with increased defaults, the business is still a happy one to be in on a portfolio basis as long as one is not adverse selected against.
This caused secured cards to be... adverse selected against, which didn’t increase losses (tough to lose money on a secured card) but did increase ops cost and, crucially, meant graduators from the card were far less likely to be good customers than previously.
