Credit card’s newest trick: 79.9 percent interest
By Daniel at 18 December, 2009, 1:18 am
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Throw those credit cards away now….don’t support these banksters..
This credit card’s newest trick? A 79.9 percent interest rate
By Candice Choi, AP Personal Finance Writer , On Thursday December 17, 2009, 6:38 pm EST
NEW YORK (AP) — It’s no mistake. This credit card’s interest rate is 79.9 percent.
The bloated APR is how First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry. 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 the steep financing charges.
So for a $300 balance, a cardholder would pay about $20 a month in interest
http://finance.yahoo.com/news/Credit-cards-newest-trick-799-apf-3359014390.html?x=0&.v=4
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This card should serve as a basic economics lesson for anyone stupid enough to get it. It’s paltry limit, $300, will do little damage to anyone’s financial future. Quite frankly, I’m sure it’s the only card those getting it are able to obtain because they already have an atrocious credit history. Obviously the holders are those who are so slow witted that they make substantially more self destructive decisions practically every day (and sadly, you can never protect these types from themselves short of locking them in institutions: jails, psychiatric wards, halfway houses, etc.) or they’ll be the foolishly dumb young who think themselves so immortal to be idiotically brash and impulsive. If the recent-and still badly crashing-housing bubble taught the US anything it should be that too many are so thoughtlessly greedy and hand-to-mouth that blaming the greedy profiteering credit companies, banks, etc. is no real solution. The more you turn into a nanny state the more stupid, careless and wreckless the average person will be, especially because they know they won’t be held responsible for their stupid actions and Uncle Sammy will come around to shift their responsibility elsewhere and bail them out. Or, more correctly, all those who aren’t stupid and foolish will end up having to pay the tabs for those who are. Great system for stupid fools, isn’t it?