Well of course she is, but I found an article from cnnmoney.com that proves that some credit card companies might even be crazier than her! The title actually caught my attention, “My credit card had a 79.9% APR”. I thought maybe it was just a ploy to get readers in and as silly as that is, it worked.

So the article details this one card company in particular, First Premier. This company targets individuals with poor credit. They basically approve anyone with a social security number but with the contingency of a massive APR. The company started with the 79.9% initial APR and found that it did not have as much success as they would have liked. How did they handle it? They lowered it to a whopping 59.9% instead. And while this is somewhat ethically sketchy it is completely legal. The Card Act, which was passed in late 2009 to protect consumers from predatory lenders, only prevents issuers from raising rates retroactively. Credit card issuers are free to charge whatever rate they want at the front end.

You would think that an interest rate carrying that much burden would deter people from getting the card, but you would be very wrong. According to the article, the company said it serves nearly 3 million customers nationwide and receives anywhere from 200,000 to 300,000 applications a month. But the buck doesn’t stop there. The company also charges $135 in service fees per year. Does anyone else think this is completely insane?! Is it really worth all that just to have a credit card? One of the draws is that you can improve your credit over time, but even with a $300 balance on a card with a 59.9% APR you are paying over $179 a month in interest charges. And if you have poor credit there is a good chance this isn’t your only debt payment every month. Poor credit creates a vicious cycle of debt that many of us never make our way out of. Your best bet is to really examine the risks versus the benefits of putting yourself and your money in this type of situation.
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Jennifer Ulrich

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  1. People fail to read the page of tiny print which explains this type of nonsense - something needs to be done to force credit card companies to inform people with straight forward and simple wording about the mess they are getting into.