Get ready to say your goodbyes to Orchard Bank credit cards. Capital One, which recently finalized its acquisition of HSBC’s U.S. credit card business, will soon stop accepting new applications for any of HSBC’s non-affinity credit cards, including those bearing the popular Orchard Bank brand name.
The Orchard Bank brand was developed after HSBC’s 2003 purchase of Household International, Inc. – which boasted more than 53 million loan and deposit account customers – brought the company a large sub-prime consumer demographic to which it could offer credit cards without much competition. It therefore figures that the people who are likely to be hit hardest by the discontinuance of Orchard Bank credit cards are those looking for low-cost options with which to build or rebuild their credit standing.
The Orchard Bank Secured MasterCard, in particular, will leave a significant void in the market, given that it has a low 7.99% APR and is currently the only prepaid card available that does not charge an annual fee during the first year ($35 thereafter). The beauty of a no annual fee secured credit card, aside from the obvious low costs, is that you won’t feel obligated to actually make purchases with the card during the course of credit building. As you may know, information is relayed to your files at the major credit bureaus whether you make purchases or not, and for people who are concerned about missing payments or overspending, it’s often preferable to simply lock a card away and benefit from the positive information that accrues as a result of low credit utilization and the account being in good standing.
While Capital One is unlikely to reinvent this offer under its own name, seeing as it already offers a more expensive secured card, people with damaged, limited, or no credit history still have a few days to apply before it disappears and the cost of credit building rises.
People interested in HSBC’s co-branded credit cards needn’t worry, though, because those cards (e.g. the Best Buy Credit Card and the GM Credit Card) aren’t going anywhere. Capital One will continue to offer them largely because their appeal is built more upon the strength of their branding (i.e. the popularity of the Best Buys and General Motors of the world) than attractive terms that may not be especially lucrative (e.g. no annual fee for a secured card).
Nevertheless, it’s obvious that the dynamics of the sub-prime credit card market will soon change significantly, so enjoy things while they last.
Update 05/25/2012: Orchard Bank Credit Cards are no longer available to new applicants. OrchardBank.com does not have any card information listed anymore.