Some Credit Cards Are Simply Evil

Don’t get me wrong. I don’t rant about “banksters” or encourage people to incinerate their plastic and go “cash only” as Dave Ramsey acolytes do. That’s a primitive and reactionary way to handle your finances.

I think credit is an attractive option, when used responsibly, and I personally net thousands of dollars each year in cash back and free flights from the credit cards I use. I abhor using cash for the simple reason that you never get rewarded with cash. And change sucks. (Also, in the interest of disclosure, I feature and review some of my favourite credit card promotions over on the popular personal finance site I founded. So I have a vested interest in this credit card game…)

With this said, there are some credit cards that are simply evil. Purely sinister. Born of the devil, truly. Take, for example, the innocent enough sounding First Premier Card that CNN Money reported on earlier today. (By the way, isn’t “First Premier” a rather redundant name?)

As CNN’s reporter wrote, “Toni Riss had a credit card with a 79.9% interest rate. The 58-year-old woman from Texas thought she struck gold when she found the First Premier card, which is aimed specifically at consumers with poor credit.”

Take a moment to let that sink in. Poor Toni Riss, who is probably a decent lady except for her subpar credit history, was given a credit card with an APR just shy of 80%. And no, that’s not a penalty or default rate.

Absolutely insane. Even borrowing “hard money” from the mob would only cost you 30% to 40% (from what I’ve heard!) — which begs the question: why is this legal?

It’s beyond usury, even. It’s just taking advantage of someone. An 80% interest rate goes above and beyond pricing out risk at the margins, so that the card issuer can remain profitable and solvent.

If someone’s credit is so atrocious that your bank can’t break even without charging 80%, you should not issue that person a card in the first place.

Ms. Riss would have been better off seeking a secured credit card from her local bank, and rebuilding her credit over time, rather than doing business with a school of piranhas.

Disclosures: Opinions expressed are mine alone, and I used to review credit cards for a living. Also, my web site has a financial relationship with several card issuers and banks. No financial relationship or position on any company mentioned in this story at time of publication.

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