With the changing regulations on credit cards, banks are giving their card fees and rates a makeover. The latest bank to do that is First Premier Bank, which caters to the subprime market.
Previously the bank charged a whopping $256 in first year fees for a credit line of just $250. Incredible.
Now, due to changing regulations, they are capping their fees at the maximum allowed 25% of the credit line value but jacking the interest rate up to 79.9%. That would be $20 in interest per month on a $300 balance. Wow! This card will only be attractive the people with nowhere else to turn.
http://seattletimes.nwsource.com/html/businesstechnology/2010532431_apussubprimecreditcard.html
In the beginning of this decade anyone who would fog a mirror could get a credit card, right? About ten years ago I had no credit history, whatsoever. When I tried to buy a cell phone, I was told that I would have to make a $1K deposit (which I refused, of course). And the first pre-approved CC offer I received was from Providian (which, BTW, was acquired by Washington Mutual in 2005). The limit on this card would be whopping $300, with no grace period, APR around 20%, and some kind of annual fee (don’t remember exactly what it was). At that time I chose to make a deposit to Wells Fargo (we live in California), and get a secured credit card, with pretty much normal APR, grace period and a low annual fee. But I totally understand people who have no money for a security deposit, and for whom a credit card with 100% APR might be still a better choice compared with no access to a credit at all.
I came across the same article. That type of usury should be illegal.