Crackdown urged on 'fee-harvester' credit cards

[babylonsister]

Crackdown urged on 'fee-harvester' credit cards
By Tony Pugh | McClatchy Newspapers

* Posted on Thursday, November 1, 2007


WASHINGTON — A national consumer advocacy group called on Congress Thursday to pass legislation halting the growth of a particularly abusive type of credit card that targets vulnerable consumers with poor credit histories.

Advertised on television and elsewhere, so-called "fee-harvester" cards are heavily marketed to subprime borrowers who can't obtain traditional credit cards.

The cards offer small credit limits — usually several hundred dollars — but when issued, cardholders immediately incur a number of high fees that can eat up nearly 80 percent of the available credit. While card companies reap hundreds of millions of dollars in fees, consumers receive only a trace of credit.

A new report Thursday from the National Consumer Law Center found that the cards often feature aggressive debt-collection operations, bait-and-switch offers on credit limits and card terms, and deceptive add-ons such as "credit protection" and unwanted memberships in travel and diners clubs.

One card, offered by South Dakota-based First Premier Bank, features a $250 credit limit, but new cardholders are automatically hit with a $95 program fee, a $29 account set-up fee, a $48 annual fee and a $6 monthly participation fee. That's $178 in immediate debt, which leaves only $72 in actual credit.

"No one in their right mind would agree to pay $178 so they can borrow $72," said Joe Ridout, a consumer services manager for Consumer Action, a nonprofit education organization.

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http://www.mcclatchydc.com/homepage/story/21026.html

[alstephenson]

1. It's disgusting what the credit card companies get away with.

Fucking predators.

[Crabby Appleton]

4. I agree completely

[leftofthedial]

2. someone should call joe biden quick

before the credit card companies lose this lucrative business

[Sen. Walter Sobchak]

3. even the recently bankrupt can obtain mainstream credit

This type of scam preys on people who just assume they have no other credit alternatives, the threshold for being deemed "credit worthy" in the United States is astonoshingly low.