No Mistake: Bank Credit Card’s New Interest Rate Is 79.9%

It’s no mistake. This credit card’s interest rate is 79.9%. 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.

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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% 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%.

“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.

http://www.usatoday.com/money/perfi/credit/2009-12-17-subprime-credit-card-apr_N.htm

Related Posts:

• Credit card’s newest trick: 79.9 percent interest
• Here’s a promising article: “Fed moves to drain some money out of economy” (posted on yahoo at 4:01 pm today)
• Interest rates are too low to encourgage common man to save.
• This so called “Stress Test” of the banks
• The Big Banks Are At War Against The People. They Are Putting Out False Information Every Day.

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