Miriam Jordan and Valerie Bauerlein, Wall Street Journal, Feb. 13, 2007
In the latest sign of the U.S. banking industry’s aggressive pursuit of the Hispanic market, Bank of America Corp. has quietly begun offering credit cards to customers without Social Security numbers — typically illegal immigrants.
In recent years, banks across the country have begun offering checking accounts and, in some cases, mortgages to the nation’s fast-growing ranks of undocumented immigrants, most of whom are Hispanic. But these immigrants generally haven’t been able to get major credit cards, making it hard for them to develop a credit history and expand their purchasing power.
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. Most adults in the U.S. who don’t have a Social Security number are undocumented immigrants.
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, home to the largest concentration of illegal immigrants in the U.S. The bank hopes to roll out the program nationally later this year.
“We are willing to grant credit to someone with little or no credit history,” says Lance Weaver, Bank of America’s head of international card services, whose team designed the program based in part on the bank’s experience in markets like Spain, which lack conventional credit bureaus to rate a client’s credit-worthiness.
The credit cards involved aren’t cheap. They come with a high interest rate and an upfront fee. And the idea of catering to illegal immigrants is controversial.
Bank of America defends the program, saying it complies with U.S. banking and antiterrorism laws. Company executives say that the initiative isn’t about politics, but rather about meeting the needs of an untapped group of potential customers.
“These people are coming here for quality of life, and they deserve somebody to give them a chance to achieve that quality of life,” says Brian Tuite, the bank’s director of Latin America card operations and one of the architects of the program.
Critics say Bank of America is knowingly making a product available to people who are violating U.S. immigration law. “They are clearly crossing the line; they are actually aiding and abetting people who broke the law,” says Ira Mehlman, a spokesman for the Federation for American Immigration Reform, a group that advocates a crackdown on illegal immigration.
Bank of America, the second-largest U.S. bank after Citigroup Inc. in terms of market capitalization, estimates that there are 28 million Hispanics in its operating area and that most of them, regardless of their immigration status, don’t have a bank. It hopes the allure of a credit card will persuade hundreds of thousands more Latinos to open accounts.
“If we don’t disproportionately grow in the Hispanic [market] . . . we aren’t going to grow” as a bank, says Liam McGee, Bank of America’s consumer and small-business banking chief.
Department of Homeland Security spokesman Russ Knocke said banking products aimed at illegal immigrants “reinforce the need for a temporary worker program” that the Bush administration has been promoting. That program would screen, tax and otherwise regulate immigrant workers and, the administration contends, would squeeze out illegal workers who now use forged or stolen documents to get jobs, driver’s licenses and occasionally credit.
Bank of America hasn’t launched an ad campaign for the new card. For the time being, it is counting on word of mouth that starts with its employees at each banking center. Many of the Spanish-speaking account holders who come to teller Luz Quintanilla’s window at Bank of America’s East Hollywood branch, already have a Social Security number and regular credit card with the bank. But she suggests in Spanish that “maybe you have family or friends who don’t have a Social Security number, but wish to build their credit.”
In selling the card, a major challenge is to persuade immigrants who are sometimes wary of plastic that holding a credit card is an important step on the way to obtaining loans for big-ticket items, such as a car or even a home. Pictures of a check book, credit card, car and house in ascending order illustrate this concept in one pamphlet in Spanish and English titled “How to Build Your Credit, Step by Step.”