Fenway Summer, a firm started by ex-regulator Raj Date, announced plans Thursday to launch its subprime credit card in the spring of 2015.
The product will be known as the Build Card, according to a news release from Fenway Summer's credit card venture, FS Card Inc. The card will offer incentives and rewards when customers habitually make on-time payments in excess of the minimum amount due, the news release said.
The subprime credit card market has contracted sharply since the financial crisis, which has left many U.S. consumers with few borrowing options other than payday loans. In the second quarter of this year, credit card loans originated to people with credit scores of below 620 were less than half their volume seven years earlier, according to data from Moody's Analytics and Equifax.
Washington-based Fenway Summer first announced its plans for a subprime credit card in February, and had originally hoped to launch the card by late summer of this year.
Many details about the Build Card, including its price and the identity of the bank that will issue the product, have yet to be announced.
FS Card's news release said that the subprime card will have a lower total cost of credit than other small-dollar lending products in the market today. The Build Card will target borrowers with credit scores around 620, the company said.
"We have done extensive research into how best to responsibly meet the needs of consumers in a way that also satisfies stakeholder calls for positive change in small-dollar lending," Marla Blow, FS Card's chief executive officer, said in the release.
"We are excited to introduce Build, and we believe that as a lower total cost credit option, it will help cardholders save billions of dollars in fees and interest compared to available alternatives."
Date and Blow are both former executives at Capital One Financial, which has been one of the leading players in subprime credit cards, and both later worked at the Consumer Financial Protection Bureau. Date served as CFPB's deputy director, while Blow was the agency's assistant director of card and payments markets.