Yup, it’s true, one subprime credit card has a scary APR of 79.9 percent! If you’re in the market for a subprime credit card, be sure you don’t fall for the gimmicks in which First Premier Bank is imposing. The First Premier credit card comes with a minimum of $256 in fees in the first year for a credit line of only $250! Starting in February, however, the new credit card law will be set in place and this will cap such fees at 25% of a card’s credit line.
In an email statement issued to Yahoo Finance by First Premier Bank they claimed, “the 79.9 APR offer is a test and that it’s too early to tell whether it will be continued. To comply with the new law, the bank said it will no longer offer the card that has $256 in first-year fees as of Feb. 21, 2010. However, customers will still be able to use their existing cards. The bank said “no final decisions” have been made regarding any rate changes for those cards.”
What’s their justification for creating such a treacherous financial product?They said they need to, “price their product based on the risk associated with the market.”
In the Yahoo Finance article that first broke this story it stated several alarming facts about this card and the bank issuing it. We’ve noted the most noteworthy of them below…
- The bank typically mails offers to subprime households, meaning those with credit scores below 700
- Premier Bankcard is the 10th largest issuer of MasterCard and Visa cards in the country, with more than 3.5 million customers
- a $300 balance would owe about $20 a month in interest
- the new law banning these (scams) comes into effect on Feb. 21, 2010.
If you happen to have less than ideal credit and need to raise some funds, I’d weigh several additional options before settling with the loan shark-esque deal offered by First Premier Bank.