Wall Street Journal had an article today about Bank of America Targeting Hispanics. It mentioned that BOA is now offering cards to those with no social security numbers to help them build a credit history. Typically, those with no social security numbers are illegal immigrants, but as I mention later, not always. For this new card, Bank of America will consider an applicant as an eligible candidate as long as they have held a checking account with the bank for three months without an overdraft. The fees (like most subprime cards) are higher than your typical credit card. Cardholders have to pay a $99 fee and will receive a $500 credit limit. If you pay your balance in a timely fashion, as a reward, Bank of America may refund your $99 deposit in three to six months and will also consider increasing the credit limit.
Although it seems like an atypical offer, this type of card that Bank of America is offering to people without social security numbers is not a new concept. Those with bad credit have always known this card as the 99/500 card. CitiBank also offers a similar card called the Secured Citi MasterCard. This card is secured by an 18 month certificate of deposit (interest bearing) and although targeting new Asian and Hispanic immigrants, it is intended for anyone who does not have a credit history. The CitiBank card requires a deposit which is held in an 18 month CD (minimum $200 and maximum $5000) and is the amount of the cardholder’s credit line. This card also allows for benefits if the card is paid on time and is kept in good standing, such as becoming eligible for an unsecured card in the future. The requirements for the card are similar to the Bank of America offer. You must be at least 18, have an income of at least $8,000 annually and a social security number or taxpayer identification number (TIN) If you are a nonresident you can also apply by completing a W-8BEN form along with a copy of a government issued ID, along with showing an existing relationship with the bank.
As you can see from Bank of America and CitiBank, these types of cards are almost identical to cards that are offered to those with bad and no credit which target people who are trying to build or rebuild their credit histories. The requirements and the benefits are similar, as well as the end goal of building a positive credit history. The only difference it seems is that there are other accommodations made such as applications and statements being in Spanish and Chinese.
While critics have claimed that what BOA is doing is actually providing a product to people who are violating the law, it is actually a very savvy move that addresses an underserved market. In all actuality, a social security number is not required by anyone and illegal immigrants or undocumented citizens are able to apply for credit at any financial institution as long as they are able to prove they pay taxes. According to the Social Security Administration,
“(2) requiring foreign nationals to apply for and obtain, before opening an account with a domestic financial institution, an identification number which would function similarly to a Social Security number or tax identification number;”
An Individual Tax Identification Number does not entitle you to Social Security benefits, but is only used for and required for paying taxes and other federal tax purposes. As long as an applicant, regardless of citizenship, has an ITIN, they are able to apply for any credit card. However, you will still need to build a credit history just as you would if you were just starting out with a Social Security Number.
So essentially, Bank of America isn’t offering anything special to illegal immigrants. Anyone with an ITIN can apply for a credit card with any financial institution. Additionally, it isn’t just illegal immigrants who don’t have social security numbers and need an ITIN. Other people that may not be able to obtain a social security number include non resident aliens that file a U.S. tax return, U.S. resident aliens that file tax returns, dependents or spouses of a U.S. citizen or resident alien and dependents or spouses of nonresidential alien visa holders.
It should be noted that if there is already a market for such cards and it is already acceptable for consumers without social security numbers to obtain credit, that it is probably best that a reputable bank such as Bank of America or CitiBank serve this niche rather than one of the shadier subprime credit card marketing companies. In this case, it is not accommodating illegal activity, but providing necessary services to a market that exists.