A subprime credit card issuer – First Premier Bank tries to recruit consumers who have bad credit and would more than likely not get approved through a good-standing bank. First Premier Bank has been offering pre-approved credit cards to consumers with an interest rate of 79.9%. Normally, when a consumer opens a First Premier credit card, the credit limit is $250 with minimum fees of $256 for the first year. But, a new law enacted last month will keep the added fees at 25% of a card’s credit line. In recent pre-approved mail outs that First Premier Bank has been sending to consumers, they have lowered the fees to $75 a year for a credit limit of $300. Even though the new laws enacted set limits on fees for credit cards, it did not enact required guidelines in regards to interests rates. Consequently, this is the reason we see such an immense change in the APR for First Premier Bank credit cards (ex. 79.9% from the previous 9.9%). The bloated APR is how the bank is skirting new regulations intended to curb abusive practices in the industry and is a strategy other subprime card issuers could start adopting to get around the new rules.
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