Such a deal! New credit card offers a mere 79.9% interest
Filed under: Credit cards
It's like some credit card companies want to be ridiculed. What else can you say about a company offering a credit card with a 79.9% APR?At first, I thought it was a joke or a misprint. But then I saw it confirmed in no less a reputable source than American Banking News, and realized that--Oh. My. God. It's true. Yes, First Premier Bank is offering a "Premier Card" credit card with a 79.9% APR.
Yes, 79.9%.
San Diego's NBC affiliate broke the story when alerted by a viewer Gordon Hageman, who told reporter Bob Hansen, "I think they're trying to take advantage of me." Hageman's retort: "Ya think?"
The comments among WalletPop writers were along the same lines. WalletPop regular Zac Bissonnette offered some words that my editors would censor if I repeated them here, but he did see one bright side: "79.9% is one HELL of an incentive to pay your balance in full each month."And Josh Smith, also a regular presence on WalletPop, chimed in: "You would be better off paying for stuff with buttons, shiny rocks and berries than using a First Premier Card."
Josh added that he received a pre-approved offer from First Premier in the mail, and that it's not just the interest rate that's insidious; the fees aren't so hot either.
The fees include:
- $29 Account Setup Fee
- $95 Program Fee
- $48 Annual Fee
- $7 Monthly Servicing Fee ($84 a year)
- $20 Additional Card Fee
And if you're wondering if this is legal, yep, it sure is. As American Banking News says, "Credit card interest rates are regulated on a state-by-state basis, and South Dakota removed the ceiling on the interest rates that credit card companies can charge in hopes of attracting national banks to the state."
All I can say is that if you've received an offer for this card from First Premier, rip it up. Please rip up this rip-off.
True, as my colleague Zac reasons, having this card "might actually be better than having a low interest rate because it encourages you to live within your means." (FYI: In case there is any misunderstanding, Zac is NOT recommending the card.)
He's right on that point. The problem is that nobody who accepts these terms is going to be the kind of person who has a history of routinely paying off their balance. The ideal person for a card like this is someone who is desperate and who feels that financially, they have no options left. I know, because I've been that person.
So if you're thinking of signing up for this card, let me talk you off the ledge.
This is the worst credit card offer I've heard of yet, by far, and the worst that probably anyone has ever heard of. Most of the worst deals come out around 30% APR, and this, of course, is well over double that. And as Josh pointed out, the fees are ridiculous. It may temporarily feel good to get the card, but I have a feeling that feeling will last less than a day, and certainly no more than a month. Once that first bill comes in, and you're looking at the fees and the interest rate, I can't imagine you'll think anything other than, "What the heck was I thinking?"
Predatory lending firms are called that for a reason, and this product preys on the last people who should be getting a credit card with a 79.9% APR.
I can't see any upside in taking this offer at all. If you feel like you need some sort of credit card, and this is your best option, then you'd be better off just going to the National Foundation for Credit Counseling and working out your debt problems with them, and getting not just counseling but enrolled in a debt management program, before one day you wake up and realize your only real option is bankruptcy.
But, hey, aside from that, it's a great card.
Geoff Williams is a regular contributor to WalletPop, mostly writing about banking issues. He also is the co-author of the upcoming book, Living Well with Bad Credit.
Reader Comments (Page 1 of 2)
10-16-2009 @ 9:23AM
John said...
As long as there are people who are in financial trouble there will also be a lot of other people who want to profit on them. In this case, the credit cards world is full with such actors who are using all kind of methods (ethical and unethical) to hunt and sign new customers. I don't know who would take this offer, but I am sure that there will be people who are desperate and will take it, even if they know the almost 80% APR!
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10-16-2009 @ 10:31AM
pst2868 said...
I can't see anyone accepting this credit card offer unless the person has a score of 80 for IQ.
Aside from the fees, you are talking about having to pay back $180 to borrow $100.
If you can't come up with $100 in the first place, where are you going to get $180 to pay back.
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10-17-2009 @ 11:13AM
chicobombico said...
Where are the credit and banking regulators that a credit card with a 80 per cent credit rate is allowed. Premier Bank needs to be investigated and the board members and management who allowed this fired. WHERE IN THE HELL ARE THE BANKING REGULATORS SMOKING CRACK OR WORSE.
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10-17-2009 @ 11:18AM
chicobombico said...
There are a lot of unemployed people because of the banks and credit card companies. THE PEOPLE PAID FOR THE BAILOUT OF THESE BANKS WITH THEIR TAX DOLLARS. NOW THE SAME PEOPLE ARE OUT OF WORK AND UNABLE TO PAY THEIR BILLS. THE CREDIT CARD COMPANIES ARE NOW TURNING IN NEGATIVE CREDIT REPORTS AGAINST THESE PEOPLE. THESE REPORTS COULD STOP GOOD PEOPLE FROM GETTING JOBS, STOP THE NEGATIVE REPORTS CREDIT AMNESTY FOR THESE PEOPLE. AFTER ALL WE HELPED THE BANKS NOW IT IS TREIR TURN
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10-30-2009 @ 3:57AM
Joan said...
It's one thing to raise interest rates to that unheard of amount, but I just received a letter from one of my credit cards closing my account......now understand, I have EXCELLENT credit with a credit score of like 790, never miss a payment and only have a balance on 1 of my 3 cards. The reason they have closed my account? Lack of use. Now my credit score is going to plummet because of one of the ways they figure a credit score, they use the credit/debt ratio. Now the available amount of credit compared to the amount I owe on the one card has dramatically decreased by 7,000. by them closing my account. So now my credit score will drop and my interest rates on my remaining cards will go up. AND THIS IS THE THANKS TAXPAYERS GET FOR HELPING BANKS OUT WITH THE BAILOUT MONEY. The govt. should have written in the bailout contract that they could not raise interest rates on customers that are good customers. I'M PISSED!
10-17-2009 @ 11:22AM
chicobombico said...
John hit the nail on the head. The Premier bank is hoping that people in desperate situations will take this credit card with the 80 percent rate because they have little or no choice. Where is congress that this is being allowed. On vacation again???
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10-17-2009 @ 11:16PM
Mike said...
Chico, where there's lots of money there is drugs.
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10-18-2009 @ 4:44PM
chicobombico said...
Well it is just like a bank to take advantage of people with low credit ratings. I am sure chargeing them a rate of 80 percent will help. How can educated people in the financial industry be so greedy and stupid. I would like to know how this interest rate helps people with less than perfect credit. After all of the fees you end up with a 50.00 credit line just enough to buy these bank executive a nice bucket of horse manure. The american way beat people when they are down, what a great country that allows this to happen. Come on people lets get together and stop these bastards while we still can.
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10-18-2009 @ 4:48PM
chicobombico said...
Mike I believe you are correct. Along with the drugs there also is greed so these bastards can buy more drugs. They are taking advantage of people that have less than perfect credit. They need to be stopped. No dam wonder they get millions of dollars in bonuses. Pack of bastards.
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10-19-2009 @ 8:43AM
Dom said...
Greed still rules in America. In the old days they put guys in jail for Loan Sharking. Today we help bail out these banks that charge usuary rates....ONLY IN AMERICA!!
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10-19-2009 @ 10:05AM
Mike said...
This sounds a lot like Hooters charging $100 for fried clams - they'll serve them to you, but they really don't want to be bothered so they charge a fortune for them. This credit card deal goes so far beyond merely taking advantage of people that I have to wonder if First Premier (?) is compelled to offer a credit card but they really don't want anyone to get one. $50?? What can you buy for $250 that you couldn't pay cash for if you were willing to save up for a couple of weeks? I cannot imagine a situation that could possibly make me want this card!
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10-19-2009 @ 10:09AM
Mike said...
Geoff: I looked at the First Premier Bank website (linked from your article) and I'm wondering if there hasn't been a typo somewhere. The website shows a card with an APR of 9.9%. Where'd the added 70% come from?
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10-19-2009 @ 10:24AM
gwilliams1 said...
There's no typo, Mike. I went to the web site and found what you saw. I'm guessing that that's First Premier's best credit card -- but they have a lot of credit cards and a lot of different interest rates, as many bank cards do. I'm basing my information on several sources, including "American Banking News" magazine and a fellow WalletPop writer who received an offer for 79.9% from First Premier -- and if you check out a site like CreditCards.com, they have several First Premier credit cards that people can apply for. If you scroll down to where it says First Premier credit cards for people with "bad credit," that is, I'm assuming, where you'll be able to get a card with a 79.9% interest rate.
http://www.creditcards.com/first-premier.php
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10-19-2009 @ 2:07PM
melissa said...
it just goes to show you that the gov't is NOT all about the people but all about themselves, the banks and any big business....squashing everyone else in their paths. Look out America, where going for a ride!
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10-20-2009 @ 7:08PM
Rick McDaniel said...
The amusing thing, is that Obama wants to paint a picture fo "democrats saving the public", over the banking excesses, which is such a lie.
The real question is.....whatever happened to the Usury Laws?????????
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10-20-2009 @ 11:00AM
Jim said...
If I banked with them i would be looking to put my savings and checking accounts with another bank. I hope their depositors start doing just that....
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10-20-2009 @ 11:09AM
CBM said...
I just tried to contact First Premier Bank electronically, just to ask them about this. I couldn't. And waht made it worse was that a bunch of pop-ups appeared on my computer. They want to chat. They wanted to make certain that I wanted to leave. Another pop-up wanted to talk about "finding the right credit card for me".
What a ruse! Doesn't this business have any social conscience?
I would love to hear their side of the the story, and their attempt to justify usury.
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10-21-2009 @ 7:40AM
no credit card debt in CT said...
Interest rates on credit cards do not matter. You should never carry a balance. Most people do not have an emergency fund so when an emergency happens, they put it on the credit card. People also go into credit card debt because they are spending more than they make.
Our economy can not be based on everyone spending money like a bunch of drunk sailors on leave....never spend more than you make.
Always have an emergency fund so if you lose your job, you don't put living expenses on a credit card. It's too late for many unemployed people to do this now but hopefully when the economy recovers, people will learn a lesson and save alot more money than they did in the past.
Congress won't change this since they get political donations from these companies. Dodd, the senator from my state (until we fire him next year) is guilty of this.
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10-20-2009 @ 11:23AM
Paul said...
I love the fact that it's 79.9. Because, gee, 80% would really sound bad.
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10-20-2009 @ 12:18PM
j said...
What ever happened to usery laws?
I'd rather borrow from a loan shark.
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