Predatory Lending Continues!!

by Jack Bragen on May 4, 2009

It seems the philosophy of many of our so-called “banks” has reverted to: “There’s a sucker born every minute.” In particular, there is an outfit that calls themselves “First Premier Bank,” that has an absolutely bogus credit card scam that is guaranteed to both rip you off and ruin your credit score.

The assumption of the ones who sent me this misleading and borderline fraudulent offer is that I am a stupid person. No, I did not accept their offer. If I had not taken the time to read their fee disclosure, I could have accepted their non credit card and would have regretted it.

First Premier Bank offered me a two hundred fifty dollar credit limit on a MasterCard; however, their initial fees total $199.00. I would not be surprised if the offer for fifty one dollars in initial credit, which is in return for paying them four fold that amount, will somehow be impossible to access due to some hidden or unforeseen technicality that this company will create.

The breakdown of fees is like this: Minimum Initial Credit Limit: $250.00, Program Fee: $95.00, Account Set up Fee: $29.00, Annual Fee: $48.00, Monthly Servicing Fee: $7.00, Optional Additional Card Fee: $20.00, Available Credit on First Statement (with Additional Card Fee): $51.00.

Is this credit card offer a scam? You tell me. This sorry excuse for a bank, run by sorry excuses for human beings, is, I am sure, not the only outfit doing this sort of predatory activity. I believe that now the major “real banks” have gotten in on the act albeit to a lesser extent.

Wells Fargo offers a one-month cash advance. For the privilege of borrowing against your upcoming direct deposit for a less than one month period of time, you will pay two dollars for every twenty borrowed. If you do the math, this works out to 120% Annual Percentage Rate.

There is another bank that offers a three hundred dollar credit limit on a Visa, and charges 25% interest, plus adds on a twenty-nine dollar annual fee. If you add the annual fee to the twenty five percent interest, it works out to an additional ten percent interest, making the actual amount that you pay a whopping 35% Annual Percentage Rate.

Has predatory lending stopped? Absolutely not. Should you read the fee disclosures and the terms of the credit before you sign on the dotted line? You’re foolish not to. The days are over of agreeing to something on the assumption that our government wouldn’t let it happen if it wasn’t legitimate. Today, there is no protection except your own intelligent caution.

These scam artists who pretend to be banks are especially unscrupulous because they target people at the bottom income brackets who may be desperate for a little bit of extra cash in order to make ends meet. A credit card with a three hundred dollar or less limit certainly would not be appealing to anyone but poor people. In return for hoping for a bit of relief from their poverty, the unfortunate people who sign up for these offers can end up in even more dire financial straits. And the ladder upward in society that is supposed to exist becomes even farther out of reach.

There is another scam artist born every minute. In the past, the credit card industry seemed to regulate itself such that this kind of misleading offer was more of a rarity. Now, with poor people comprising greater numbers in society than they have in decades, the industry of just ripping off the poor and the desperate has become its own multi-billion-dollar niche. The result of this is the downfall of many persons who were “in a bad way” already.

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