[berettafan]

The workings behind bank credit cards, particularly those given to high risk folks, are VERY interesting.

A friend who used to do audit work in banks shared a story about a local bank buying bad debt for .05 on the dollar and issuing secured cards to the debtors with VERY high interest rates. The bank offered to show 1/2 of the debt originally owed by the debtors as paid off and issue the credit card for the remaining half.

The debtor ended up with a new credit agreement for 1/2 of what they originally owed and -0- available credit on their newly issued card. As the card was paid down available credit went up. All of a sudden the bank had turned 10 million in bad debt into 5 million in good debt which was now worth many times what they originally paid for it.

Kinda like sending a clapped out Nova to Earl Scheib and calling it restored. Ugly, ugly business.