79.9 Percent Interest Credit Card From First Premier Bank Skirts New Regulations

[onehandle]

Source: Huffington Post

NEW YORK — 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.

Read more: http://www.huffingtonpost.com/2009/12/17/799-percent-interest-cred_n_396191.html

[WriteDown]

1. I have to believe that if you sign up for this card....

You deserve what's coming to you.

[Sebastian Doyle]

3. The ONLY valid use of this card I could possibly imagine

Would be for someone with less than great credit, who got the card as a last resort, and in doing so was certain they would pay the balance off every month, and render the ludicrous interest rate irrelevant.

Of course the only purpose in that would be to re-establish "good credit" but if this idiot bank didn't make any money off you, they would probably cancel your card. They sound like the type who will find a way to screw you one way or another.

[WriteDown]

9. Could be....

I just can't believe anyone would actually sign up for this. You'd be better off just waiting for your credit to repair itself.

[Myrina]

16. You are correct.

4 years ago when I was trying to qualify for an FHA loan, the finance folks at the real estate office suggested I take out one of these cards, use it ONLY to put gas in my car twice a month, and pay it off entirely each bill cycle. I did just that and I still have the card. It's helped me raise my credit score by having 'available credit' and also its nice to have on hand in the event of an unexpected dr's office co-pay or late night vet visit. And with a limit of $250, I can't get myself into an insurmountable hole.

You just have to learn extreme restraint and only use it when you know you can pay it off almost immediately.

[No Elephants]

17. People who are desperate sign up for almost anything.

[WriteDown]

22. Its a lose-lose...

Either people will yell and scream because they cannot get credit or have no opportunity to "repair" their credit or it'll be labeled usury. See post 16 for an interesting anecdote.

[No Elephants]

25. Funny.So far, lenders are the only ones I've heard yelling and screaming for 79% interest.

Unless you count gangsters.

[WriteDown]

26. If there is no demand...

then no one will sign up. Right?

[No Elephants]

28. Please see Reply 27. And I never said there aren't desperate people. In fact, I said the opposite.

I said there was no crying out from anyone but gangsters and professional lenders for 79% interest.

[WriteDown]

31. I think we are in agreement...

I do think that some people are enough credit risk to warrant 79% interest, but I wouldn't want to be the one lending to those people. :)

[Nevernose]

41. I actually have this exact card w/ the 9.9% interest

First let me say that I'm leaving shortly and I'm typing on a cell phone, so answering may be difficult.

In my 20s I was, shall we say, "not responsible." I spent most of '93 living in a truck and following the Dead, for instance. Time rolls by, I've got my act together, a real job with insurance and good pay and I could even afford to miss a paycheck or two before life goes to hell.

But all those years came with a cost: bad credit. Its hard to get a cellular phone or an apartment. They raised my car insurance rates (though I've never missed a payment in 7 years w/ the company) because apparently bad credit equals bad driving. Can't get a gym membership w/o paying years up front. Mortgage and car dealers charge exorbinant interest, and probably rightfully so, since I am a risk.

I'm incredibly responsible these days, but no one will give me credit. One regular company rejected me not because of my score, but because they no longer issue new cards to anyone in Clark County, NV. So, to rebuild credit, I took out a 1000 loan at the bank and got the first premier card, and paid my student loans on time. My score has gone from 580 to 695 in a year, but credit companies now want a score of 750 or better (before last year the cutoff was 700 ot 720. Anyway, the company gouges me, but if I want to live in the 21st century this is the price I pay.

[mahatmakanejeeves]

50. "I spent most of '93 living in a truck and following the Dead, for instance."

Eugene? Las Vegas? I was in Oregon in June 1993, and I crossed paths with the followers as they made their way north from California. I did not attend any of the Eugene shows. I should have, as there were tickets available for at least one show.

[mstinamotorcity]

56. It is good to have

a good credit score. But there are some things you can do to help yourself get better deals. Join your local credit union they appreciate on time payments. They offer family and friend plans, some have their own car lots of previously owned vehicles at deep discounts.They have credit cards also.And they report to the major credit reporting agencies.And most of all it is owned by the members.And there will always be a bright smile when you walk in the door.

[bc3000]

4. because the less educated among us deserve to be exploited?

Sorry, I can't agree with that.

[WriteDown]

6. The old saying will always ring true....

"A fool and his money are soon parted."

[54anickel]

10. Corporate America's motto -- may ring true but that doesn't make it's right or just. It is

exploitive and oppressive and we should all fight to put an end to it rather than "blame the victim" as deserving.

[WriteDown]

12. Are you saying we can eliminate victimhood?

True story: Some girl in the target parking lot(cute too) told me that she had run out of gas and wanted to sell me a DVD for a couple of bucks. I guarantee someone or many someone's bought that DVD.

[No Elephants]

19. No, but we should not legitimize egregious usury, either. For every "victim," there is a victimizer

Typically, victimizing people is illegal--and should be.

[onethatcares]

34. was it that girl from California?

you remember the one, Cary Pagent or something like that? Was it a DVD of her?

[WriteDown]

35. Wish I had looked closer :). nt

[salin]

45. and that example is analogous... how?

scamming for a couple of bucks... versus placing folks who may have little financial education (per reading and understanding the small print, which I would bet is not explained clearly in any conversation with reps from the credit card companies) into a near 80% interest rate... is similar exactly how?

[No Elephants]

18. Most often, by somone unscrupulous.

[damntexdem]

15. It should still be outlawed.

Usury like this should be a crime.

[WriteDown]

23. See post 22 and 16 for why its a difficult issue. nt

[No Elephants]

27. Loan sharking has been prohibited from time immemorial--and for good reasons.

People desperately want heroin, too, but we still don't let pushers off the hook.

Credit card issuers were sending credit cards in the mail to everyone under the sun, including doggies and babies, at interest rates a lot lower than 79%. Despite all the defauts, they still made money. So, let's not pretend the only way to repair anyone's credit and still stay in business is by charging 79% interest.


Besides, you yourself posted on this thread that simply waiting until credit repaired itself would probably be better for the borrower.

[WriteDown]

29. I did say that...

But it won't stop people from screaming that credit isn't available to them. Personally, I think we have to get VERY strict on CC lending and mortgage lending. I don't think any home loan should ever be offered without AT LEAST 10% down. When I say this to people, they think its ridiculous though.

[No Elephants]

32. Please see Reply 27. People scream for a lot of things. That does not mean

sociey has to legalize providing those things.

[WriteDown]

36. Very true...

I was just speaking in terms of public reaction. People have gotten used to "easy" money ie loads of credit.

[54anickel]

51. That's pretty much how things worked prior to de-regulation of the banking industry.

It started with interstate banking so that banks in well regulated states could base their headquarters in a state with less regulations (ie interest caps) and be exempt from the stringent states regulations. Suddenly the only rules applied were those of the state the bank headquarters were located in. Then states started changing their legislation to entice banks to relocate. For a while, there was competition between states as to who could be the most laxed, most accommodating to the banks.

Been sliding further away from consumer protection (that's what strict lending requirements were all about) within the banking industry since the early 80's.

[WriteDown]

53. The only problem with requiring large down payments...

is that you basically create two classes of people. Those that can afford homes and those that never will be able to afford a home. I still think its better than the current "easy credit" mess.

[ThomCat]

42. So anyone uneducated, unintelligent or desperate enough

to apply for this deserves to be financially destroyed by it for the rest of their lives?

That a brutal and despicable attitude. x(

This should be illegal.

[salin]

46. Bingo

I could not have stated it better.

[WriteDown]

52. Are you saying the uneducated, unintelligent or desperate do not deserve credit?

I am. I'm just pointing out how this will be screamed about.

[Zynx]

2. Do they realize this will result in punitive legislation?

[hayu_lol]

5. Time to dust off the old LOAN-SHARKING laws...

part of the article says that the other card companies can follow this example.

Call-in 'anti' card campaign necessary.

[54anickel]

11. Punitive legislation? From whom? n/t

[No Elephants]

33. Why, from old school liberals, of course. Like Barney Frank. Oh, wait.

[ThomCat]

43. After the crystal clear demonstration we have just seen

of how fully owned our politicians are by corporate interests, do you really think that any bank is the least bit afraid of legislation right now? :(

[tomm2thumbs]

7. but private health care insurers will treat Americans much better - like they do now

(excuse me, I just vomited a little even just writing that)

[brentspeak]

13. Don't you belive Milton Friedman and his followers? The "free market" regulates itself

In the same way that the free market of mortgage securities trading regulated itself...

[No Elephants]

21. Speaking of sub prime mortgage securities, how soon will we be seeing sub prime credit card

derivative securities, with AIG insuring the investors?

"It's deja vu all over again." Yogi Berra

[tomm2thumbs]

49. and just like the speed limit regulates itself

it's like most things, when someone ain't watchin', funny things happen

[benld74]

8. Me n da boys are shaking our heds in disbelieve? Da shame! Rocko, why didnt u tink of dis!?

[No Elephants]

24. But Boss. Rocko did tink uv it. Den da heat told us it wuz only legal for da banks!!11!!

If we done it, dey'd trow us right in jail.

We need one of dem--whatcallits. Lobbies.

[bvar22]

14. Anyone who believes that the New Health Care Bill is going to "regulate"

...the Health Insurance Cartel needs only to look at this example as evidence of how effective those new "regulations" are going to be.

The loopholes have already been inserted.
The army of lawyers are already organizing their defenses.

The individual forced consumer of the invisible product of the Health Insurance Cartels doesn't stand a chance.

[Lorien]

38. What for profit product will they force us to purchase next?

Anyone what to hazard a guess?

[ThomCat]

44. My guess would be retirement accounts

to prop up investors and the stock market. :(

You know, because social security is always supposedly on the verge of insolvency. Government has to mandate some kind of alternative in order to protect us all from having nothing in our old age.

:eyes:

[bvar22]

48. Well, it can't be anything tangible.

If it were tangible, it would have some benefit to the Working Class who would have to actually make something and retail it.

It WILL have to be another imaginary product like Private Health Insurance that creates NO WEALTH, provides NO service, only benefits the Corporate Ownership Class, and leaves Americans with absolutely NOTHING to show for their money.

[mbperrin]

20. I'm so glad that we're getting tough on the fucking credit industry!

They wanted 80%, but got jawboned down to just 79.9!

Yay!

Things like this are what forced me to become an atheist. No one in the universe cares or is looking out for us. Here's the proof.

[Incitatus]

30. Don't worry.

The bad people will pay for their transgressions in the afterlife. Carry on.

:hi: :sarcasm: :hi:

[Lorien]

37. And our leaders call themselves "Christians"

They never did read what Jesus had to say about caring for the poor.

[andym]

39. Good for them-- egregious credit card rates might actually spur action to CAP rates

Their greed will be their downfall. 30% was already ridiculous, but it's hard to imagine anyone thinking that 79.9% is fair.

[mackerel]

40. Too much instead gratification in our society.

"First Premier said the 79.9 APR offer is a test and that it's too early to tell whether it will be continued"


I assure you there is a fool out there somewhere who will use this card knowingly.

[demosincebirth]

47. Some poor jerk who can't get credit any other place.

[LanternWaste]

54. I'm seriously beginning to think that...

I'm seriously beginning to think that the banking and credit industries are nor merely the sacred cows of the D.C., but of some posters too.

[mstinamotorcity]

55. We were talking about

this about a month ago. it may be two.We already warned DU members that the cards were already to use and only had to be activated. We also warned members that they were targeting moderate to low income working people and seniors. So i know this is no suprise. Oh by the way has anyone checked their health care premiums or co pays lately.Mine went up. Talked about that about a month ago also. When you read these post some of them are so you can be aware of things before the hit the mailbox of your front porch.And so you can warn family and friends.