Posted on 12/17/2009 1:32:21 PM PST by Steelfish
Newest Credit Card Trick? 79.9 Percent Interest First Premier skirting new regulations intended to curb abusive practices
NEW YORK - A credit card with an interest rate of 79.9 percent is how First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry.
That's right. 79.9 percent APR.
It's a strategy other subprime card issuers could start adopting to get around the new rules.
Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card's credit line.
In a recent mailing for a preapproved card, First Premier lowers fees to just that limit — $75 in the first year for a credit line of $300. But the new law doesn't set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent.
"It's the highest on the market. It's the highest we've ever seen," said Anuj Shahani, an analyst with Synovate, a research firm that tracks credit card mailings.
The terms are eyebrow raising, but First Premier targets people with bad credit who likely can't get approved for cards elsewhere. It's a group that tends to lean heavily on credit too, meaning they'll likely incur steep financing charges.
So for a $300 balance, a cardholder would pay $20 a month in interest.
(Excerpt) Read more at msnbc.msn.com ...
I get a better rate from Vinnie on the corner. Of course, his late penalties are worse.
Obama is not going to like these greedy fat-cat bankers doing this.
It makes loan sharks blush ....
no matter how bad the economics or the phiosophical aspects of it may be, there is a massive populist outburst over usury coming. A smackdown will be coming one way or another. These guys are really straining at the sense of decency of even those among us least inclined to regulate.
Hey, your body’s your collateral!
This is the result of the Olympian efforts of Barack, Rahm, Barney, Nancy and Harry to protect the average middle and lower class citizen with their new regulations for the banking industry - 100% APR loans. Dems are financial wizards.
These guys are really straining at the sense of decency of even those among us least inclined to regulate.
And that's how regulation always comes about, in the end -- it seems. Someone, some business, some group strains the sense of decency because of what they are allowed to legally get away with. This always ends up with some kind of regulation or law...
It's always been that way...
if they use these scam cards to donate anonymously to Obama, Obama will love them....and then give them stimulus pork to cover their campaign donations...oops losses.
‘This is the result of the Olympian efforts of Barack, Rahm, Barney, Nancy and Harry to protect the average middle and lower class citizen with their new regulations for the banking industry”
As much as I hate them this is not due to their efforts.
This is due to greedy and unethical bankers who prey on the stupid and desperate.
if you do not like their terms, shop elsewhere
Vinnie?
Do you think its the government's responsibility to protect people from their own stupidity?
Is this an abusive practice by the credit card company or a response to specific customers who abuse credit card companies (through non-payment, etc?)
Wow - where do I sign up ???
“Do you think its the government’s responsibility to protect people from their own stupidity? “
Hmmm is theft illegal? Is murder illegal?
Do you think its governments responsibility to restrict those activities?
“Is this an abusive practice by the credit card company or a response to specific customers who abuse credit card companies (through non-payment, etc?)”
If someone doesn’t pay why would you continue to lend them money???
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