Bankruptcy & Credit Card Marketing

The recent financial recession has hit many consumers extremely hard. Millions of credit users have become unemployed and had to rely on credit cards to make necessary purchases. Other individuals simply managed their finances poorly and ended up having to declare bankruptcy. While a bankruptcy used to cause customers to be turned down for any credit accounts, credit card marketing efforts have been stepped up to consumers who have declared bankruptcy.

Credit card companies realize that consumers who have not made smart credit decisions in the past are likely to repeat their mistakes. Some credit card companies maintain records of their customers who declare bankruptcy and use those lists to continue market to these customers. Once an individual declares bankruptcy their balance either has to be paid off or is removed by a court order. This process depends upon whether an individual declares Chapter 13 or Chapter 7. Chapter 13 involves setting up a payment plan. Typically, credit card companies may agree to a payment plan before bankruptcy to ensure that they receive something for the debt.

Credit card companies may entice customers who had a credit card before chapter 13 bankruptcy with a secured credit card. A secured credit card account can be used to rebuild credit. Consumers cannot spend any money that they do not deposit. For example, to receive a $500 credit limit a consumer must deposit $500. Credit card companies are able to make lucrative profits by charging high interest rates and fees on these accounts. Capital One, Bank of America and many other major credit card companies offer these accounts for individual with no or bad credit.

Many consumers want to reduce credit card debt to avoid having to declare bankruptcy again in the future. Credit card companies are not making it easy for consumers who make poor decisions to avoid their marketing tactics. Customers need to be very careful to ensure that they are not snared by a credit card marketing program in the future.