Ulin featured interview (by Sheryl Nance-Nash) for cover story for creditcards.com:
"Carrots offered, sticks abandoned: Card issuers lure late payers. Are cards that target high-risk customers right for you?"
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Banks need debtors Make no mistake, the banks have not come up with these products out of the kindness of their hearts. Balance-carrying customers are the bread and butter of the credit card business. Issuers are looking for ways to hook them and to minimize the risk of delinquency at the same time.
"These unique features are a direct reflection of new financial regulations set by Congress, which limit the ability of vendors to boost their revenues and bottom line by making significant profits off delinquent customers," says Jon Ulin, managing principal with Ulin Financial, a private wealth management firm.
Banks used to be able to make money off late payers by jacking up interest rates as soon as a cardholder missed a due date. "If you were even a day late making your monthly payment ... you immediately got your rates wacked up close to nose-bleed 30 percent levels, with no further negotiation to fix -- even if you had been paying your bills on time," says Ulin.
The CARD Act of 2009 prohibits such rate hikes until a cardholder is 60 days or more behind in payments. But even if banks don't charge immediate penalties to late payers, they're still benefiting from loans that are growing on their books. You may not be charged interest initially, but once you get past that introductory period, interest rates are as high as 23.99 percent. That's why banks are marketing cards that appeal to higher-risk customers.