Wow, I don't think the U.S. Banks have sunk this low, YET)
Card companies offering credit to homeless young peopleLucy Ward, social affairs correspondent
Wednesday April 6, 2005
The Guardian
Credit card companies and catalogue firms are targeting homeless young people living in hostels and urging them to apply for credit, according to research published today. A study by the homelessness charity Centrepoint found almost a quarter of young homeless people surveyed had been offered credit via unsolicited promotional literature from credit card companies and other lenders sent directly to their hostels. The charity's chief executive, Anthony Lawton, branded the practice "unconscionable" and called for tougher regulation of the promotion of financial products to young people. Kate Green, the head of the Child Poverty Action Group, said the targeting of the poorest young people was "sick".
Two-thirds of those surveyed, reported receiving glossy brochures inviting them to take out loans or apply for cards. Lenders were found to have put up credit limits without young people requesting this, with letters setting out the change failing to reach those who had moved on to new accommodation. Several of those interviewed said they had then been able to spend beyond their means, and ended up facing high interest repayments.
The Centrepoint report, Too Much Too Young, exposes high levels of debt among homeless youth. Of 100 young people consulted, 82% were in debt, owing an average of £1,000 but some as much as £15,000.
The prime causes of the slide into indebtedness were identified by Centrepoint as low incomes, problems and delays with benefits administration, poor financial literacy and lack of access to affordable credit, together with exposure to tempting offers of credit at a young age. Among the consequences of being over-indebted were stress and illness, the charity found, with some of the young people being treated for depression and a third not coping with their existing debt. Four out of 10 of them are in rent arrears, and as many have borrowed from family or friends (37%, compared with 6% of the total population).
(more at link above)