First Premier Bank, a subprime credit card issuer, has a credit card with an interest rate of 79.9%. The bloated APR is how the bank is skirting new regulations intended to curb abusive practices in the industry. It’s a strategy other subprime card issuers could start adopting to get around the new rules. Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. But starting in February, a new law will cap such fees at 25% of a card’s credit line.
In a recent mailing for a preapproved card, First Premier lowers fees to just that limit — $75 in the first year for a credit line of $300. But the new law doesn’t set a cap on interest rates. Therefore we see the 79.9% APR, up from the previous 9.9%. First Premier targets folks with bad credit who likely can’t get approved for cards elsewhere.
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