A Credit Card With A 79.9% APR
CNN Money has an almost incredible story today about a 58-year-old woman from Texas who was offered a credit card with a 79.9 percent APR.
Toni Riss had bad credit and applied for a card from a company that specializes in making credit available to people with a checkered credit history.
"I about had a heart attack when I got a disclosure notice saying that my starting rate of 29.9% was going up to 79.9%," Riss told CNN. "It was ludicrous. Talk about a highway robbery."
CNN reports this is all perfectly legal:
The card proved popular with consumers, said First Premier Bankcard CEO Miles Beacom, but the performance was bad: "A lot of the people ran up the card, defaulted and went directly to charge off."
As a result, they dropped the rate to 59.9%. "We also tested it at 23%, 33%, 45%, but 59.9% is the one that shows the best performance and where the organization can market the product," he said.
Since then, nearly 700,000 people have signed up for the card — and more than half of them carry a monthly balance.
That sounds excessive, but let's put it in some perspective. Consumers Union looked at payday loans, or cash advances, in Colorado, which keeps records of such things, and found that their loans averaged 485.26 percent APR.
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