No doubt, credit card rates are on the rise. We've heard it would happen and it's happening. But it seems that First Premier Bank, based in South Dakota, may be stretching the limits (if there are any).
Gordon Hageman lives in the San Diego, California area and was sent an invitation for a pre-approved credit card with an interest rate of 79.9%. Yep, just shy of 80%. Since it's probably compounded monthly, the actual yearly rate will come out closer to 103%.
Now Gordon admits his credit isn't perfect, but he thinks it's about average. Gordon called the bank to make sure he wasn't misreading it and he wasn't. First Premier claims to be the country's 10th largest issuer of Visa and MasterCards and "focuses on individuals who have less than perfect credit, but are actually still creditworthy."
I'm 103% certain that First Premier probably loses a lot of money on some people who get the card and never pay their bills. I'm certain they also make a profit. I was unable to determine who owns First Premier or to find any information about their profits & losses.
Now Mr. Hageman thinks that possibly First Premier may be trying to take advantage of him. He noted that the interest rate was not declared on the cover letter, but was on the included "fine print disclosure" (the picture accompanying the article seemed to indicate the interest rate was in large print and the rest of the disclosure was fine print).
I actually see nothing wrong with First Premier's actions. The interest rate was disclosed, on the disclosure statement. Mr. Hageman has a choice to sign up for the card, or frame the offer for continued humor (I'd laugh at it every day). Nowhere in our constitution are citizens guaranteed the right to life, liberty and low interest credit cards.
(Source for post is here).