Posted on 02/14/2010 3:58:43 AM PST by BIOCHEMKY
APR Shocks Many, but Issuer Says They Are Pricing for the Risk
If you have bad credit in the new era of credit card regulation, be prepared to pay -- dearly -- for the privilege of using credit. That's the message underlying recent credit card offers that feature jaw-dropping interest rates of up to 79.9 percent.
The sky-high rates may be a sign of things to come in the market for so-called subprime credit cards as issuers who lend to the riskiest of borrowers try to figure out how to stay in business and comply with the new credit card reform law.
"We need to price our product based on the risk associated with this market and allow the customer to make the decision whether they want the product or not," according to a statement issued by Miles Beacom, CEO of Premier Bankcard, the South Dakota credit card marketer that mailed test offers in September and October featuring 79.9 percent and 59.9 percent annual percentage rates (APRs) on cards with $300 credit limits. Premier markets credit cards issued by First Premier Bank.
(Excerpt) Read more at finance.yahoo.com ...
The Credit Card Act of 2009 includes a Credit Cardholders' Bill of Rights which lists several provisions aimed at limiting how credit card companies can charge consumers, but does not include price controls, rate caps, or fee setting.
The act was not expected to affect existing credit card contracts. However, the act that was passed does apply to contracts made in the past, and becomes effective on February 22, 2010.
No surprise: The bill was cosponsored by House Financial Services Committee Chair Barney Frank and Representative Maxine Waters and 38 other Representatives.
cut them up, its really that simple
Are these cards being offered to guys who just got out of jail? In that case, it might not be such a bad deal....
Wow. People still used instant debt cards? Worse than heroin.
Hmmmmm. I guess this is why my card issuer has decided to slap me with a $60 annual fee if I charge less that $2K for the year, effective April 1.
Now, where did I leave my scissors?
Speaking from experiance, I agree. Credit cards are like booze, a good friend or a bad master depending on the person.
They should not be allowed to offer cards to people with debt problems. All cards should be requested by the person by letter. Then the person should have the terms and interest rates explained to them and have a letter signed by them to show they know the dangers involved.
OMG - thats a nice free market approach.
What business are you in ? Do you sit there and only accept customers that request your product ? Why don’t we appoint a govt. agency to decide who your service is good for - we’ll get you a list of approved customers. Why don’t we require that your business can’t market it’s products or services and tell you what you can charge too ? Egad - it’s just another business - don’t use it if you don’t like it.
The purpose of this card is to repair your credit. They only give you a couple hundred dollar credit limit. You make your monthly payment, they give you a positive report. This is only for people who can not get credit anywhere. It is very expensive way to improve your credit, but that is their niche.
Yep. Sears decided to slap a $30 a year fee on me.
Luckily, I had the money to pay off my balance, and they lost a customer they’ve had since the 1970’s.
Greedy losers... they’ll get what they deserve.
You can get a card secured by a saving account and work your finances that way.
Same here with Citibank and their new $60 fee. So long suckers.
and they really do care about the citizens they are supposed to represent. they have been collectively (financial industry and congress) screwing the consumer since they let rates go to 30%. then they finished them off on the other end by tightening up bankrupty laws.
nothing we do seems to hurt them. they just tack on another fee somewhere else.
80%???? If “Big Louie” shows up at your front door, call it what it really is.....loan sharking.
It wasn’t Sears, it was CitiBank, the criminal enterprise controlling Sears credit.
“Egad - it’s just another business - don’t use it if you don’t like “
While I agree with your free market sentiment credit card companies are not ‘just another business’. They actively prey on the ignorant, naive, and desperate. They lobby Congress to get banking laws changed in their favor. Not a little bit in their favor but heavily in their favor.
They make high risk loans to people and then seek government intervention when those people don’t pay their bills.
They are scum. Remember the visa commercials about putting that vacation you can’t afford on your card? They don’t sell their services, they sell dreams people can’t afford.
“nothing we do seems to hurt them”
So stop using them. Thats really the only answer.
Yeah, and I just heard a commercial talking about what a low interest rate you'll pay for your FAST FOOD if only you'd use the advertiser's credit card.
I would make sure the person can pay for the stuff I would be willing to sell them. Isnt that common sense? When you buy a car or a house, they run credit checks, dont they?
Free market isnt an excuse for going hog wild and extending credit to people who cant pay. Isnt that how we got into this mess to begin with?
In a more general sense, it's the concept of universal entitlement (aka social justice).
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.