I don't know about you guys, but I cannot wait to get my own credit card with an APR of 79.9 percent.
Thanks to the recently passed CARD Act of 2009 [PDF Summary
], credit-card lenders are scrambling for new ways to
generate credit lines for FICO-impaired borrowers.Yahoo: Card Provider Defends 79.9% APR
Aw, heck. What's to defend? If the default risk dictates a rate that high, then you as
lender ought to be free to offer your product to whatever
customers find it suitable to their needs.
"We need to price our product based on the risk associated with this market and allow the customer to make the decision whether they want the product or not," according to a statement issued by Miles Beacom, CEO of Premier Bankcard, the South Dakota credit card marketer that mailed test offers in September and October featuring 79.9 percent and 59.9 percent annual percentage rates (APRs) on cards with $300 credit limits. Premier markets credit cards issued by First Premier Bank.
For those trainwreck-gazers in the crowd, here's a PDF of the Fees & Limitations
for First Premier's current (2010-02-13) online card offer. I mean, how sweet are these
Initial Credit Limit: $300
APR for Purchases & Cash Advances: 23.9%
One-Time Processing Fee: $95
Annual Fee: $75
Add'l Card Fee: $29 per Card
Late Fee: $29 or $35
Credit Limit Increase Fee: 50% of Increase Granted
Internet Access Fee: $3.95 (One-Time Fee)
Autodraft Fee: $11 or $7
And there's a market for this.
[Says Miles Beacom, CEO of Premier Bankcard:] "From our initial research we know that 83 percent of the people who accepted the offer are fully aware of the interest rate they are receiving and the purpose of the credit card to help re-establish credit. If anyone accepts the offer and didn't fully understand it or no longer wants it they can take advantage of our full refund of fees policy."
That's mighty compassionate. Mother Teresa had nothing on these guys.
"There's 70 million people out there who have been identified with problem credit," says Beacom, adding those are people with FICO scores lower than 640. "These are people who have had problems with their credit in the past."
He likened people with bad credit to bad automobile drivers who must pay higher auto insurance premiums if they want to continue driving. "These are people who have had those same accidents or speeding tickets with their credit."
He adds: "It's going to be very difficult for these individuals to obtain credit after February."
I'm not sure that's a bad thing, given that "easy" apparently means bending over for a 79.9 percent APR.
Labels: Credit Cards, Credit Scores, Debt