Credit card with 79% interest rate

[The Straight Story]

NEW YORK (CNNMoney) -- Toni Riss had a credit card with a 79.9% interest rate.

The 58-year-old woman from Texas thought she struck gold when she found the First Premier card, which is aimed specifically at consumers with poor credit.

...

But about six months after opening the card -- at the end of 2009 -- she received an unwelcome surprise in the mail.

"I about had a heart attack when I got a disclosure notice saying that my starting rate of 29.9% was going up to 79.9%," said Riss. "It was ludicrous. Talk about a highway robbery."

At that same time, First Premier Bank launched a new credit card with the sky-high 79.9% rate.

...

Since then, nearly 700,000 people have signed up for the card -- and more than half of them carry a monthly balance.

And yes, that rate is completely legal. The Card Act, which was passed in late 2009 to protect consumers from predatory lenders, only prevents issuers from raising rates retroactively. Credit card issuers are free to charge whatever rate they want at the front end.

http://money.cnn.com/2011/02/07/pf/credit_card_interest_rate/index.htm?source=cnn_bin&hpt=Sbin

[Myrina]

1. A "STARTING" rate of 29% ???

That in itself is disgusting.

[Systematic Chaos]

2. Almost as bad as payday loans.

And actually might be just as bad, depending on how many monthly "fees" are also tacked on with that card.

[customerserviceguy]

20. Payday loans don't help in rebuilding your credit

Since there are so very many non-lending reasons to have a good credit score (finding employment, getting affordable auto insurance) these things might be a bargain in the long run, if you use them intelligently.

[LynneSin]

38. Rates-wise yes but like the other person replied - you can't rebuild credit with a payday loan

If you wanted to rebuild your credit you'd have to use a credit card.

[RKP5637]

3. Eventually people will just walk away as with mortgages and not give a F. n/t

[nomb]

10. And they should. Lifetime enslavement by any means should be rebelled against.

[RKP5637]

12. Eventually, I hope, Americans wake up to what is occurring. n/t

[customerserviceguy]

18. This is probably for people who have a bankruptcy on their record

within the last several years, and can't 'walk away', at least for seven years after their last filing.

I had to declare bankruptcy in 1996. On the way to building myself back up, I used high interest rate credit cards, that had some stiff annual (and issuance) fees. Gradually, you trade up to better and better cards, with better terms. Now, my credit is sterling, and I get the best interest rates available.

These 'usurious' cards are the steppingstone to the way back from financial ruin, if used intelligently.

[RKP5637]

21. Glad to hear that!!!

:)

[customerserviceguy]

24. I suspect a tinge of sarcasm in your remarks

Yes, this is terribly high interest. But, if the 'borrower' only charges what little they need, and pays it off every month, the hit is minimal. Also, these cards will report to credit bureaus, unlike the aforementioned 'Jimmy the Butcher' and the payday loan places.

When a person applies for and gets this card, they're buying a start on the return of their credit rating. That's important if you want to get a job, or get affordable auto insurance. Yes, those things have zilch to do with one's credit rating, but unfortunately, that's the way the game is being played these days.

It's usury, in any sense of the word, but the person applying for this line of credit is trying to pay to have some semblence of their old life back again.

[RKP5637]

25. No, I didn't mean it that way at all, just sounded that way on a second look! However,

I wonder if you're not the exception? You or I and many others would have used the card wisely to have done what you did, but I do wonder how many might have gotten caught up in more debt by having charged too much. I think the credit card bill should have capped interest rates so as to have prevented this type of usury. I really have a hard time justifying a legal interest rate of 79.9% on people that have to pay that amount for whatever reason.

[customerserviceguy]

28. There are two kinds of people out there

The first is those who got in trouble, and know how to avoid it in the future.

In my case, I went through a ruinous custody battle that left me without a job, and a buttload of bills to have to pay as a result of the legal travesty that was visited upon me. As I got out of the baby-making game after the last child of that marriage was born, I was not going to repeat my mistake.

Then, there are the people who will always live off the money they don't yet have. They're the ones who are going to pay 79.9% intrest for the privilege of doing so. Presuming that the reason they turn to this card is because of bankruptcy, they will have to either pay up or dodge the creditor for a very long time.

Indeed, I think I am the exception, but I would hope that most who suffer the effects of bankruptcy have been duly educated about what it takes to avoid going to that dark place ever again.

[RKP5637]

29. It's really a bad path to have to go down. I have a friend that went through it

some years ago. I had a lot of leveraged debt some years ago and was OK until the finances of the country started falling apart for many of us. I was lucky, so very lucky. I was able to shed debt before the housing collapse. Now please take this the right way, I'm glad it all worked out OK for you.:)

[customerserviceguy]

30. I do take it the right way

And yes, I'm glad it worked out for me, too. I do truly believe that there are people who are going to use this crazy credit card to get back on the path towards a good credit rating. What proportion, I don't know. But it's up to the individual how they proceed from here on.

As I say further down this thread, there are probably better ways (like secured cards from a decent credit union) that would be a better and cheaper way to dig your way out of the problem, and I'm sure I could have done things better. But in 1996, I didn't have the collective wisdom of folks on the Internet to draw upon, so I made my own mistakes. Here's hoping that this discussion helps somebody reading this tonight.

[RKP5637]

31. Yep! "Here's hoping that this discussion helps somebody reading this tonight." All of

this thread has been a really good discussion. The Internet is soooo valuable for information to draw upon! I hope this is helping someone someplace!!!

[customerserviceguy]

32. I get a lot of great insights from my fellow DU'ers

And I learn way more from those I disagree with, than those who support my initial position.

That's one of the thousand reasons I love this place.

[RKP5637]

34. Yep!!! Same here! DU is an incredible group! I learn so much too! One of

thousand reasons I love this place! One of the really interesting things about DU is the incredible range of topics, all of the groups and how well the software and moderators work to manage all of this. It's all quite amazing including the vast knowledge of the members.

[tularetom]

4. As banks discover how dumb Americans really are

and how much shit the government lets them (the banks) get away with, this is only the beginning.

[RKP5637]

14. Is that ever the truth, Americans are dumb and they let anyone get away with

whatever they want and just take it in stride. Best deal the banksters have going is dumb Americans and gov. being complicit with much of it ...

[meegbear]

5. Thank you * and the repugs in congress ...

this was helped by the passage of the "Bankruptcy Bill", you remember, the bill that was written to 'help' people? Well part of that wondrous law was allows credit card companies to do that shit.

[Statistical]

6. What Bankruptcy Bill. The one championed by Joe "Mastercard" Biden?

[Bluebear]

8. Don't forget to thank Biden for that too!

[meegbear]

9. OK ...

Thanks Joe, you DOUCHE!

[KT2000]

7. Greed is now capitalism

that must be protected at all costs. If you are against greed then you are against America!

[RKP5637]

26. Yep, if you don't love greed you just have to be some kind of

far left wing commie socialist dirty hippie. It's the American way to rip off people.

[TheMightyFavog]

11. Wow. Even Big Jimmy The Butcher and the rest of the boys at the East River Loan Company...

Are saying that's too much interest!

[guitar man]

13. The percentage you're paying

is too high price while you're living beyond all your means, And the man in the suit has just bought a new car from the profit he's made on your dreams...

How prophetic, now 40 years later :(


Steve Winwood, 1971
Traffic-Low Spark of High Heeled Boys

[VWolf]

15. Amen brother, amen

They just don't write 'em like that anymore.

[progressoid]

16. First Premier is one of the worst offenders. And the guy that ran it is filthy rich.

Denny Sanford "gave" a half BILLION to a South Dakota health system. It's now called Sanford Health Systems. :eyes:

[delightfulstar]

17. That's downright predatory, regardless of what that act says.

Better to go to a reputable bank or CU and get a secured credit card. There are few, if any surprises with it, and it's a better alternative for building/rebuilding credit. Any wonder why so many people are drowning in debt and forced to file BK?

[customerserviceguy]

19. Secured credit cards are the way to go

But how many credit unions offer them? And how many people don't have access to those credit unions? You usually have to live or work in a specific area to join a credit union, and many folks out in the country just don't have the availability of these fine institutions.

[sarcasmo]

22. I don't think the Vig on a 50,000 dollar loan from the Mob is that high.

[lonestarnot]

27. LOL

snort.

[Arkana]

23. Jesus, was this card originally called the "Gougy McPricefuck Card" in conception?

[Poll_Blind]

33. A great example of how rigged the game is. That we don't have simple legislation to prevent this...

...sort of highway robbery by surprise is just another proof in my eyes how incredibly predatory our country's businesses can be on our citizens. Without congressmen and women to legislatively protect them from shifty corporations, what's the utility of even having representation if they don't represent you?

PB

[Odin2005]

35. Credit cards are evil. I will stay away from them at all costs.

[2Design]

36. Legalized mafia

[XanaDUer]

37. I'm sorry, but the Mafia is better than that

nt.

[NNN0LHI]

39. Not so sure about that?

http://www.independent.co.uk/news/uk/crime/loan-shark-who-charged-8000-interest-rate-jailed-for-four-years-500365.html

Loan shark who charged 8,000% interest rate jailed for four years

By Maxine Frith, Social Affairs Correspondent

Wednesday, 27 July 2005

A loan shark who preyed on the sick and poor, charging interest rates of up to 8,000 per cent, has been jailed in the first case of its kind.

Mark Johnson earned more than £800,000 from lending money at extortionate rates to vulnerable people on benefits, then threatening them when they could not pay up. He used the proceeds to buy a Pors-che and a BMW and was buying a £500,000 house when he was arrested. snip

Interest rates of up to 8,000 per cent were charged on loans of as little as £100. Johnson would take a "client's" benefit book as "security" for the loans and cash them himself, piling on huge default charges for missed payments.

One person who borrowed £500 ended up owing more than £22,000. Johnson took another woman's benefits of £150 a fortnight and gave her just £20 a week to live on. People who refused to pay had their possessions taken and were threatened with violence.

He leaned over one elderly woman as she lay on her sofa recovering from a stroke and threatened to take her television...

[XanaDUer]

40. Whoa

Well, maybe the Mafia can go in with the credit card and banks? Imagine that merger!