The subprime credit card market, which contracted sharply during the Great Recession but has since bounced back, has a new competitor.
The Ollo card is being launched by a newly formed company called Fair Square Financial Holdings that has the backing of a team of several big names in finance.
Rob Habgood, a veteran of the credit card businesses at Bank of America and Capital One Financial, is CEO of the Wilmington, Del.-based firm. The firm’s senior executive team includes several former executives from B of A, Capital One and JPMorgan Chase.
In addition, the company’s board members include former Citigroup CEO Vikram Pandit, former E-Trade CEO Steven Freiberg and onetime credit card industry executive Ajay Mookerjee.
“Almost a decade after the financial crisis, millions of Americans are still limited in their access to competitively priced card products,” Habgood said in a press release. “We believe there is an opportunity to better meet the credit needs of hard-working Americans, while helping them achieve their financial goals.”
The standard annual percentage rate on the company’s Ollo Platinum card is currently a variable rate of 24.99%. That is slightly above the average 23.04% APR for consumers with bad credit, according to
The company’s second product, the Ollo Rewards card, also features a standard, variable-rate APR of 24.99%. The card carries a $39 annual fee, but cardholders receive 1%-2% cash back for purchases.
The two cards are currently available by invitation only, according to the company’s website.
The U.S. subprime card market shrunk by more than 35% between 2007 and 2013, but it has rebounded quickly in the last few years.
Subprime card loans grew by 10.2% in the fourth quarter of 2016 compared with the same period a year earlier, according to a recent report from Autonomous Research. That pace easily beat 6.7% growth in the market for cards to consumers with prime credit scores.
“This is the seventh straight quarter subprime has outgrown prime,” the report stated. “There is still discipline on key metrics like line size, but overall it feels like subprime is now becoming more competitive.”
Fair Square Financial has financial backing from Pine Brook Partners, an investment firm that focuses on the financial services and energy sectors.
