- ....about six months after opening the card -- at the end of 2009 -- she received an unwelcome surprise in the mail. "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%," said Riss. "It was ludicrous. Talk about a highway robbery."
- At that same time, First Premier Bank launched a new credit card with the sky-high 79.9% rate. 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."
Unfortunately there are still some suckers remaining in the system, who believe they need to pay back debt. Indeed Frontier Bank went to 59.9% and actually has some who carry a balance. Some proportion even (don't snicker) send money to the bank in return for their charged goodies.
- As a result, they dropped the rate to 59.9%. Since then, nearly 700,000 people have signed up for the card -- and more than half of them carry a monthly balance.
- And yes, that rate is completely legal. The Card Act, which was passed in late 2009 to protect consumers from predatory lenders, only prevents issuers from raising rates retroactively. Credit card issuers are free to charge whatever rate they want at the front end.
- The company said it serves nearly 3 million customers nationwide and receives anywhere from 200,000 to 300,000 applications a month.