CompuCredit Corp., a Major Subprime Credit Card Issuer, Reports a 346% Increase in Profits
Written by Curtis Arnold
Posted On: August 18, 2005
CompuCredit Corporation, which has seen a 138% increase in its stock price over the past year,recently reported a record net income with a 346% increase in profits. According to Jay Putnam of CompuCredit, David G. Hannah, Chairman and CEO of CompuCredit said:
"We were very pleased with our record earnings this quarter. The sale of a significant portfolio of previously charged-off receivables this quarter was a major contributor to our results, and we also feel very good about the performance of each of our business units in a terrific economic environment for our business."
In June of 2004, CompuCredit had 2.97 million managed accounts. A total of 268,000 new accounts have been added in the second quarter of 2005. As a result of this increase, the company said it plans to allocate $14 million more than planned originally to credit card marketing during the second half of this year.
CompuCredit is an Atlanta based company that markets credit cards to higher risk consumers with poor or no credit. The company was founded in 1996 by David Hanna and Richard W. Gilbert, Vice Chairman and Chief Operating Officer.
CompuCredit markets so called "subprime credit cards" to consumers who may have been turned down by traditional credit card providers. Subprime cards are frequently criticized by consumer advocates because of high fees and high interest rates. An example of this is the Aspire Visa Gold credit card which charges an annual fee of $150, a monthly fee that adds up to $78 per year and a $29.50 "account opening fee." The card has a 19.5% annual percentage rate (APR).
Curtis Arnold, founder of CardRatings.com, an online consumer advocacy group that provides free ratings of credit cards, noted:
"Since such sub-prime cards often start with a charging limit of only a few hundred dollars, the credit limit on these cards is often nearly used up on fees before the consumer makes any charges. A secured credit card is a much better alternative for consumers. "
Companies such as CompuCredit counter such claims by noting that they are taking a risk by offering credit cards to higher risk consumers.
According to Jill Lerner, of the Atlanta Business Chronicle, Jay Putnam of CompuCredit stated:
"We are giving somebody the change to build a credit history ... restore or rehabilitate a credit history."
To learn more about CompuCredit, go to:
To view a longer article on this topic, please visit the Atlanta Business Chronicle's website.
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