Money for nothing Posted by Brent at 11/15/07 05:44 PM

A new study exposes subprime credit cards with high start up fees.

Money for nothing, a new study exposes subprime credit cards with high start up fees

The National Consumer Law Center (NCLC) released a new study exposing the abusive practices, called “fee harvesting” of several issuers of “subprime” credit cards. The credit cards, with names like “Aspire” and “Premier” are marketed to low income communities as a way of repairing bad credit. According to the study, the card issuers market hope and opportunity when what they’re really pushing is a credit card loaded with upfront fees that significantly reduce the amount of usable credit. As a result, card holders go into debt for the fees but get very little buying power from the card. The NCLC study detailed how, after charging $178 in upfront fees on a First Premier card, with a credit limit of $250, the consumer purchasing power is reduced to just $72.

The same bad actors. According to the NCLC study, the issuers of subprime “fee harvesting” credit cards include several banks which have previously run afoul of federal regulators. The study underscores the serious need for vigilant oversight by federal regulators and more effective consumer protections against these types of money for nothing schemes.

To read the NCLC study click here:
http://www.consumerlaw.org/issues/credit_cards/content/PR_pedatoryCC.pdf

comments (6)

1 Posted by zachn at 11/21/07 08:04 PM

It is clear from this article that these credit cards represent nothing more than an attempt to prey on the weakest and most vulnerable members of our society. One has to wonder where the government oversite was.

2 Posted by Vctor at 11/29/07 06:11 PM

Yes. This is a crucial issue. These companies are not only focusing on low-income communities but preying on immigrant communities with a limiting understanding of English.
Several years ago I had seven maxed credit cards and I kept receiving more pre-approved cards and offers.
The whole system keeps pushing people to borrow more and more and dig themselves into financial holes they can't get out of. I was lucky to be able to do a Banruptcy, but I hear many stories of people who end up homeless after losing everything.
Those companies need to be reigned in. The down side of a free market economy being that corporations answer mostly to themselves and can get away with murder. This has got to chage.
V.

3 Posted by Brandon Danaher at 11/29/07 08:40 PM

There should be regulation on credit cards at the state level that regulates the kind of fees they can charge our poor and lowly citizens. Obviously there are some payoffs somewhere on this deal!!!!!!!

4 Posted by James O at 12/10/07 07:15 AM

The practice of “preying” on misfortunate individual continues to be standards of some credit issuing companies. We are now seeing the government trying to bail out some of these companies in the mortgage industries. Regulation will only occur if it effects “politically influent’s” pocketbooks. We have the options of contacting our law makers, and educating individual to the “preying” of these companies.

5 Posted by Danny Yee at 03/27/08 02:59 PM

A certain percentage should be collected from Credit Card companies as their "tax". Some of our government's financial woes should be from this source and the oil companies. I know oil exploration is expensive, but at 4,5,and 6 bucks a gallon, they are making more than enough. Does anyone know how much credit interest generates? 18% and the government can't collect 5%?

6 Posted by Derrick at 03/27/08 03:31 PM

To respond to Zachn above, you mentioned Government oversight. The problem is the people running our government, own or control these large companies, and it would not be in their financial interests to stop or oversee these plans. The other problem in our country, is we Americans are too laxed and no longer hold these, elected officials accountable.

When was the last time you heard of a senator, a congressman or even a governor being fired for not doing their job well and causing more problems? Most of the time,we the people just sit back and wait until their term in over and we elect someone else. Before our country returns to the world power it once was and the economy is changed, the citizens of America need to take back the dominance over our government,stop the fear and make our voices heard once again.