Creditnet News Story

High-interest credit card offers intended for people looking for credit repair

Tuesday, December 22, 2009

By Linda McCarthy

Card comes with 79.9 percent annual interest rate.

Credit card offers can come with a number of different charges and fees, though one bank in South Dakota is making news because of a particularly high interest rate associated with one of its products.

The state's Sioux Falls Argus-Leader recently published a story highlighting a card from First Premier Bank that charges an annual interest rate of 79.9 percent on an account with a $300 limit. Representatives from the bank say the card is intended to help those with damaged credit get a chance to rebuild it.

"People who have damaged or no credit pay a higher cost, but if they make timely payments, after a while their cost comes down dramatically," Dana Dykhouse, chief executive of First Premier, was quoted as saying.

However, the paper's report also states that consumer advocates feel as though the card could take advantage of some consumers. Regardless of where they stand, both issuers and advocates indicate such an account is in response to impending federal regulations on credit cards.

Starting in February, issuers will no longer be able to arbitrarily raise rates on credit card accounts, which is causing many to increase them while they still can. The new Credit CARD Act will also require lenders to review rate increases.