Credit Card Offer Comes with a 79.9% Interest Rate

Wednesday, October 21, 2009

How much is too much?

Gordon Hageman couldn’t believe the credit card offer he got in the mail. A wine distributor called the number on the offer, gave them the offer code and verified his information and it was right:  the pre-approved credit card came with a 79.9 percent APR.

Yes, 79.9 percent!

The offer is for a Premier credit card from First Premier Bank. Based in South Dakota, First Premier claims to be the country’s 10th largest issuer of Visa and MasterCard credit cards. The site says it “focuses on individuals who have less than perfect credit but are actually still creditworthy.”

Hageman acknowleged that his credit isn’t perfect, but he said it’s about average. He said the pre-approved offer didn’t mention the actual interest rate on the card — for that, he had to read the enclosed fine-print disclosure.

“I think they’re trying to take advantage of me,” said Hageman.

A spokesman with the Federal Deposit Insurance Corporation (FDIC) said interest rate limits on bank cards are set by the individual state and not on a Federal level. According to information on the South Dakota Legislative Web site, there is “no maximum or usury restriction.” In other words, the individual bank can set its own interest rate limits.

Let this outrageous bank offer stand as a cautionary tale for consumers.

This entry was posted in Consumer Rights, Corporate Greed, News and tagged , , , . Bookmark the permalink.

14 Responses to Credit Card Offer Comes with a 79.9% Interest Rate

  1. Woodcliffe says:

    I’m glad I’m not the only one who gets up ridiculously early.

    About the 79.9% credit card offer. I’ve never heard of anything more punitive than this. I don’t care what your FICO score is, 79.9% is criminally high and the FDIC needs to stop such practices.

    Only in America, kiddies.

  2. Joe in Colorado says:

    Good morning everyone. Woodcliffe, I always get up at the crack of dawn but I didn’t know you did. The credit card offer is extended by a bank marketing to a niche market — people with bad credit. So it’s a classic catch-22. You can’t get a traditional card and because you’re seen as a high risk borrower, firms like First Premier have you by the balls. But at 79.9% interest, a $500 balance repaid at the minimum each month can quickly become a $30,000 bill. My advice is to avoid any offer like this. Just save up and pay cash if you don’t have credit.

  3. bradfrmphnx says:

    In many ways this country is ruled by the banking industry. And the practices within that industry have become nothing short of criminal. I have heard mumblings about banking reform coming from the Obama administration. One can only hope.

    Some people talk of nationalising the banking industry. Like the health insurance industry they have become legal gangsters with the sole desire of making profits for CEO bonuses. And they will stop at nothing to garner that profit.

    It’s a sad state of affairs when we have to nationalise everything in order to be protected from it. Are we truly then headed for a more socialistic society?

  4. feminazi says:

    Without question, this is unacceptable. I understand credit worthiness as one factor in determining risk but 79.9% interest constitutes a rip-off. Just because a bank can kick a person in the teeth doesn’t mean they should be allowed to do so. I had no idea states were permitted to set interest rates. People with bad credit suffer enough hardship.

  5. Harry says:

    Banks like First Premier need to be taken out back and beat with a board. I’ve never heard of 79.9% interest. Please, consumers, don’t accept this.

  6. retahyajyajav says:

    79.9% is tantamount to loan sharking.

    If the FDIC can’t or won’t regulate these sub-prime credit card lenders then the FDIC needs to be chucked and a new Federal regulatory agency created to replace it.

  7. VicoDANIEL says:

    Sen. Richard Durbin (D-IL) introduced SB 500, a bill last February that would cap interest rates for consumer credit at 36% annually.

    This rate would be reserved for consumers who meet certain criteria that deems them to be the biggest risk borrowers.

    36% APR is less than half the amount First Premier offered the consumer in this piece.

    While I certainly think it is fair for banks and S&L’s to protect themselves from risky borrowers, I do not think a poor FICO score is grounds to basically rip off a borrower. Many Americans who file for bankruptcy end up being among the best risks as they have the most to lose by not managing their financial affairs in a post-bankruptcy environment.

    vicodaniel1987@yahoo.com

  8. libhomo says:

    Christopher: love the mobile version of your blog.

    Joe in Colorado: Stories like this make me wonder about bank nationalization too. The banksters are destroying our country.

  9. Scott Dancer says:

    The irony here is, a credit product that charges a usury interest rate of 79.9% is a clientele least able to afford it.

    In all my years in marketing and now in real estate, I have never heard of a credit card like this. It boggles the mind and the non-response from the FDIC is patently unacceptable.

    We need to write the House and the Senate and demand they put a stop to such practices.

  10. Fran says:

    Whoah!!!

    Did the bank offer him an exclusive special– because he called in, for the 110% APR if he signs up TODAY????

    Caveat Emptor!

    Buyer beware!!!!!

  11. Fran says:

    Ohhhh! PLUS a $75 annual fee. WOW!!!

  12. the banks arent destroying this country – they have already done that. they want to make sure they kick us even harder when we are down

    now i see the greedy evil banks are going to charge you for NOT using your credit card – an inactivity fee.

  13. Rock says:

    Those clowns sent me the same offer but with a 9.9% interest rate for the first six months. That was enough enticement for me NOT to take advantage of this offer.

    I’m going without credit cards until Congress puts in the necessary consumer protections –and I don’t care what credit hits I take for not using plastic.

  14. Pingback: WTF! Wednesday #47 « My 2 Cents

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