Bank of America is expanding a program that allows individuals with no credit history or even a social security number, many of which are illegal immigrants, to obtain a credit card. In the past few years banks started to allow these individuals to open checking accounts and even obtain mortgages, but now the first step to allowing unsecured credit is taking place. According to The Wall Street Journal (free preview), the BofA card is open to individuals without a Social Security number or a credit history as long as they have held a checking account with the bank for three months without an overdraft. The card carries a starting APR or 21%.
I see a few problems with this. First, BofA states they are not breaking any anti-terrorism or banking laws by providing these services. While I’m sure they have high-profile attorneys making sure they manipulate every loophole in the law to keep it legal there are still some very serious concerns. Someone with no social security number in this country cannot have a verified identity. So does this mean anyone can go to Bank of America and ask to open a checking account claiming to be an immigrant? Could I walk into a branch, say I have no social security number and be allowed to open an account?
With the new anti-terrorism and anti-money laundering regulations, not to mention identity theft concerns it is virtually impossible to open any sort of bank account or obtain credit without proof of identity. BofA is using this as a method to take advantage of the growing Hispanic population, which clearly is a quickly growing market, but will they use some sort of profiling to determine who they extend this offer to? I don’t know about you, but I don’t get a warm and fuzzy feeling knowing that potentially anyone that is in this country illegally could create an identity, even without a social security number can not only open bank accounts or buy a home, but could obtain unsecured credit as well.
Aside from the obvious security concerns I feel Bank of America is taking advantage of this group of people. Our citizens have a terrible time managing debt as it is, but now they want to extend credit to a new segment of individuals who are potentially at an even higher risk of running into debt problems. Since these people are not legal citizens what happens when they max out their credit cards and disappear to their native country? Who pays the bill? The shareholders? The tax-payers?
Bank of America is doing this for one reason, and one reason only — to make more money. They realize there is a large population of people who are dying to obtain a credit card yet until now have been unable to do so. So what does BofA do? They decide to allow virtually anyone to obtain credit and then charge a high interest rate on top of that. More money in their pockets.
This isn’t an issue about illegal immigration, that is a topic that isn’t a appropriate for this site. But I do see this as an issue that is opening the doors to security concerns and of corporate greed. I will leave it at that, but I am curious to see what others think about this so share your thoughts.
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Filed Under: Credit Cards
About the Author: Jeremy Vohwinkle is a Chartered Retirement Planning Counselor® and spent a few years working as a financial planner. Today, he helps people make the most of their money by writing about personal finance here and elsewhere on the web. Jeremy is also Coach at Adaptu and a regular contributor for other publications such as Intuit, and American Express. Be sure to follow Jeremy on Twitter or Google+.