Bank of America Aims New Credit Card at Illegal Immigrants

Quietly, and without much fanfare, Bank of America has implemented a program offering credit cards to customers without a social security number.

This courting of the undocumented isn’t new.  In recent years, banks and lending institutions nationwide have offered checking accounts and, at least, once upon a time, before the housing bubble burst, mortgages.

What undocumented citizens haven’t been able to do easily, if at all, is procure credit cards.  No credit cards mean, usually, limited or no credit history – severely limiting the purchasing power of the undocumented.

That is, until Bank of America.

The new Bank of America program is open to people who lack both a Social Security number and a credit history, as long as they have held a checking account with the bank for three months without an overdraft.

The Charlotte, N.C., banking giant tested the program last year at five branches in Los Angeles, and last week expanded it to 51 branches in Los Angeles County.  The bank hopes to roll out the program nationally later this year.

The cards don’t come cheap. They have a higher interest rate – between 21 and 22 percent — and a hefty, upfront fee.  However, once established, the credit cards could be a gateway to cards with lower rates, provided the credit isn’t abused, and monthly payments are made on time.

To assess an applicant, the bank employs non-traditional "judgmental lending," a concept pioneered by MBNA Corp., the credit-card company that Bank of America acquired in January 2006. In essence, the bank bases its evaluation of a potential client’s credit-worthiness on a subjective review by its employees, rather than on standardized financial data crunched by a computer.

The program is sure to raise both the eyebrows and ire of social conservatives.  The majority of undocumented people in the United States are in the country illegally.  And though Bank of America is quick to point out that its program complies with U.S. banking and terrorism laws, it’s unlikely to stem the tide of vitriolic debate in this country.  The debate over citizenship, and who should and should not be counted as a citizen, is a tricky, sticky affair with no easy answers.

Some critics have already spoken out against Bank of America’s program.  "They are clearly crossing the line; they are actually aiding and abetting people who broke the law," Ira Mehlman, a spokesman for the Federation for American Immigration Reform, a group that advocates a crackdown on illegal immigration, told the Wall Street Journal in a recent article.

Bank of America isn’t simply up against anti-immigration factions.  The Latino market, which seems to be the target of the bank’s initiative, has long been credit-hesitant.