USA Today: Credit card trap springs eternal, so don’t ignore warning signs

Posted by Kendall Harmon

After incurring debt problems, Rosemary Potter of Pinon Hills, Calif., decided this year to try to repair her credit. She didn't qualify for a standard credit card, so she signed up for what's called an Imagine Gold Card, hoping to use it to raise her credit score.

It didn't turn out as she'd hoped. For a modest $300 credit line, she was hit with a $150 annual fee, plus late fees and over-the-limit fees. After she'd had the card a few months, her credit score was still blemished, so she canceled it.

"I'm staying away from credit cards now," Potter, 57, says.

The credit crunch has made it harder to get loans, especially for those with bruised credit. To fill that gap, a breed of credit cards, often called subprime β€” and some critics call predatory β€” has increasingly sought out consumers. These cards offer only a slight amount of credit, yet charge steep fees. Among their targets: young adults with little credit history and families struggling to climb out of debt.

In the first half of this year, direct mailing of such cards jumped 41% over the same period in 2006, according to Mintel International Group, a research firm. Millions of consumers are being hurt, says a new report on subprime cards from the National Consumer Law Center, which has another name for them: fee-harvester cards.

Read it all.

Filed under: * Economics, PoliticsEconomy

5 Comments
Posted November 27, 2007 at 6:40 am [Printer Friendly] [Print w/ comments]



1. Matthew A (formerly mousestalker) wrote:

Always read the fine print.

November 27, 8:38 am | [comment link]
2. KAR wrote:

“The rich rules over the poor, and the borrower is the slave of the lender.”—Proverbs 22:7

November 27, 10:49 am | [comment link]
3. Philip Snyder wrote:

One way to combat the flood of credit card offers is to shred the paper (using a cross-cut shredder) and then stuff it with two pennies into the return envelope.  The credit card companies are charged for each return envenlope posted and the two pennies simply add to the cost of postage.  They send out mail because it is cost effective to do so.  Make it not cost effective and they will stop. 

BTW, I picked up this tip when I worked for a direct marketing firm in the 90s.

YBIC,
Phil Snyder

November 27, 12:01 pm | [comment link]
4. Jeffersonian wrote:

I believe half of the deforestation of America has occurred just to print the credit card applications that have infested my mailbox.  There is no end to them.

November 27, 9:21 pm | [comment link]
5. Peter dH wrote:

I do not want to condone predatory practices or mailboxes flooded with credit card offers. But, in our indignation, we shouldn’t lose sight of the simple fact that people such as Rosemary have defaulted on their debts and failed to meet their obligations. They have a track record of not building in any resilience against tougher times, even though they know full well that tougher times will come sometime. They do therefore represent a much greater risk when offered credit. To the lender, risk is cost, and simply has to be factored into the asking price and the terms of the agreement. The alternative is to deny people any credit whatever.

To be honest, the latter might be the most loving and Christian thing to do in many cases. That, or offer them serious financial planning support.

November 28, 6:20 am | [comment link]
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