Legit Credit Card to Rebuild Credit
You can still find a legit credit card to rebuild credit, but get ready to pay for it. Government legislation is making some legit credit card offers seem criminal as companies battle regulations to offset high risk losses of bad credit people.
What constitutes a legit credit card offer? Is it low interest? A large credit limit? No, to be a legit credit card, it simply needs to follow government regulations which include disclosing all Terms & Conditions.
Legit Credit Card Legislation Causes Costly Interest Rates and Low Limits
To have a legitimate credit card offer, the issuing company must fully disclose the interest rate, terms, conditions, fees, etc. With that openly revealed, the credit card is legit.
First Premiere Credit Card has openly disclosed its credit limit, fees, and its 79.9% interest rate.
Wait... perhaps that's a typo... maybe it's supposed to read 7.9%... or maybe even 9.9%... right?
No... The 79.9% is correct.
NBC San Diego reported that a Sacremento man received a pre-approved credit card offer from First Premiere, with a 79.9% interest rate. The recipient, thinking that the interest rate was printed in error, called First Premiere to verify the rate. The company confirmed that 79.9% was indeed the preapproved credit card's APR.
And that wasn't the only bad news... In addition to the super high interest rate, the card came with upfront fees that eat up 80% of the credit limit, leaving only a $50 line of available credit.
Is this a legit credit card offer? As of the date of this article, you bet. The credit card fully discloses the interest rate, terms and fees and other necessary information. The interest rate may seem criminal, but the card is; for the moment, a legitimate credit card offer.
Yet once the new credit card laws become effective February, 2010, credit card issuers won't be able to take up more than 25% of available credit with initial fees. As for the interest rate, there are no federal caps on rates. Instead, each state has their own maximum interest rate regulations and some states have absolutely no interest rate caps at all.
So what do you do when you receive a preapproved, legit credit card offer with a super high interest rate? Either accept it because you are certain you can payoff balances before the grace period expires, or simply reject the offer.
But why are some credit card companies charging such super high rates? You can blame this problem on government regulation of an industry which should be deregulated to encourage competition and subsequently drive down rates in the pursuit of customers. Because of government restrictions, the credit card companies that dare extend unsecured lines of credit to high risk, bad credit people, have to spread risk (potential costs) across the full spectrum of customers, not just the bad credit ones.
Look at the problem this way: Two people want to borrow money from you. One person has borrowed from you before and has always repaid you quickly with no problems. The second person has borrowed from other people that you know, and has always taken extremely long to repay and only after repeated (and aggravating) collection attempts. In this situation you would readily loan a lot of money to the first person with low interest and no collateral. The second person; however, you may not want to loan money at all, definitely not a lot of money. And if you did, you'd want collateral and to charge a high interest rate. Only fair, right?
Not according to democrat legislatures. They feel that you should loan money equally to everyone, even to bad credit people. In fact, they want banks to loan money not just to good credit people, but also to bad credit people and to not raise interest rates on them when they get behind on payments. And they want you to continue loaning them money, even after they've borrowed a lot which they have yet to repay. That's why many banks have failed. It's not necessarily bad practices on part of the banks, but rather bad legislation.
With an open, free market, banks and credit card issuers can adjust interest rates, fees, etc, according to each individual's worthiness, thus not having to raise interest rates and reduce credit limits on everyone.
But a 79.9% interest rate? Is that overboard? Maybe not, afterall it is a preapproved credit card offer. As such, the credit card company is not certain of the recipients credit history without yet pulling a recent credit report. The company could be placing themselves in very high risk. So, since a credit card company cannot raise interest rates on delinquent payers or people with other bad credit records, instead they can charge a high rate to everyone and then perhaps later lower rates on the good credit history cardholders. We're not saying that is what First Premier is doing, but our such a strategy may one day become standard practice if democrats continue trying to control the credit industry. Think about it... have you ever seen any government agency; any at all, that has operated with financial efficiency? The government cannot even control its very own budget.
Even if you have bad credit, there are likely people with worse credit than you. Do you want to pay higher interest rates than you should, just because credit card companies cannot raise rates only on those worse credit people? Should you be restricted to a couple hundred dollar credit limit because there are people with worse credit, and the government dictates that the credit card company cannot lower limits on those people? Is this really fair?
If you recall back when President Clinton was in office, the nation enjoyed ample credit at great terms. Was this because of Clinton? No, it was because Republicans had control of Congress, which makes the laws. But as democrats gained control and enacted legislations against the credit industry, not only did rates get affected but also banks began to fail. The lesson learned, is that the credit industry should be a self-regulated, free market, of which our capitalistic nation was formed.
Tell your legislatures you want credit card companies to compete against each other for your business, not to have to compete against government legislation which causes high rates and low limits... tell them "no government regulation".
