Left: Usurious "Tribute Gold MasterCard" summary of terms; click to enlarge details.
(Toledo, OH) A young person I know, who shall remain nameless, applied for and received his first major credit card. Upon closer inspection of the terms, though, I was shocked to find that First Bank of Delaware - through its agent CompuCredit Corporation - will be exacting at least 62.59 percent interest on this $500 Tribute Gold MasterCard.
CompuCredit describes itself as a "provider of financial products and services to the underserved market" and as having a corporate culture that is "focused on providing the underbanked with the credit they deserve."
The annual percentage rate on this preposterous credit card is 29.99 percent, and they tack on a whopping $85 annual fee. In addition, there is a $6.50 "account maintenance fee" per month, which is $78 per year.
Let's see. If this person only charged $250 worth of goods and services today, in 12 months they would be paying 65.2 percent interest just on the annual and monthly fees, plus 29.99 percent in actual interest. That becomes 94.19 percent interest on the $250 balance.
And then there are other assorted goodies, like the $35 late payment fee, the $35 overlimit fee, and the cash advance fee of 5 percent over and above the 29.99 percent basic rate.
Now, admittedly, this young person has little in the way of financial savvy, and there is an important lesson here in financial responsibility that needs to occur. Still, a part of me begins to question the point at which loans to people with little or no credit (or poor credit) become outrageously usurious.
This card seems to have gone far beyond the level of acceptable standards in consumer finance, and I hope that there will one day be a day of reckoning for those who fleece the unsuspecting and the financially naïve.
And - for those of you who just stumbled across this post - be sure to read the terms and conditions of every financial document you sign. There are far too many devious corporations like First Bank of Delaware and CompuCredit Corporation that will be more than happy to rip you off.