I got a couple of credit card solicitations in the mail yesterday. The Discover card is offering me a 19 percent APR, with a 25 percent cash advance. No interest on transfers; for 14 months, but a 3 percent transfer fee. No annual fee.
Not great, but nothing horrid.
First Premier Bank, on the other hand, was horrid. Credit limit is $700. A $49 annual fee. A monthly service fee of $10.50, and it seems to arrive with a balance of $59.50, outstanding.
The interest rate, and the cash advance, are the same, but it’s not nicer than Discover, because the interest rate is 36 percent. That $10.50 monthly service charge is an introductory rate. When all is said and done you are paying, $126.00 for the first year (with the annual fee, and the service charge plunked on the bill from the get go), and after the rate goes up to $14.50 a month, $174.00, so that you can have a $700 credit card.
Even if you don’t use it, they are charging you 25 percent per annum for the opportunity of paying 36 percent APR on $700. This is what they are calling a, “platinum” card.
The terrifying thing (apart from the changes the credit card industry got made into law under Bush fils) is that this business model works.