Creditnet News Story

Card for subprime borrowers carries fees

Tuesday, February 23, 2010

By Linda McCarthy

People have to pay to activate the account.

Consumers with a subprime credit score may find it more difficult to get credit card offers. There are, however, cards marketed directly to these types of borrowers.

Though these cards do give these consumers an option for credit, they may also come with a variety of fees. Recently the Associated Press looked at one of these cards, the Premier Bankcard.

"The new credit card law bans surprise rate hikes and caps first-year fees to 25 percent of the credit line. After that there is no cap," the AP said. "Cards marketed to subprime borrowers can still come with significant costs."

On a card with a $300 limit, there is a processing fee of $45 which the consumer has to pay before they get the card. They also have to pay an annual fee of $75. If a consumer goes over their limit, they have to pay a fee of $29.

Late fees depend on the amount of the cardholder's balance. Balances of $500 or less could bring a late-payment fee of $29, while balances more than that carry a fee of $34.

Many consumers may find that lenders have increased or introduced fees for credit card accounts. Some card issuers increased fees in order to make up incomes they might lose because of the Credit Card Accountability, Responsibility and Disclosure Act.