Prometheus 6

The law center said CompuCredit’s financial statements revealed that the issuer “collected $400 million in fees from a portfolio of fee harvester cards that by mid-2007 had saddled cardholders with nearly $1 billion in debt.” The company issued a statement, reported this week on National Public Radio (npr.org), calling the report “misleading.” It also sent a letter to the law center before the report was published insisting, among other things, that its cards “meet or exceed the federal regulatory requirements and industry best practices.” 

I bet they do. 

A typical example the law center offered was this: a card issued with a credit limit of $250. After a $95 program fee, a $29 setup fee, a $6 monthly “participation” fee and a $48 annual fee, the consumer winds up with “an instant debt of $178 and buying power of only $72.”

Included in the report is the tale of a sailor on leave who charged $85 to her new card. Because of all the fees, that put her over her $250 limit, which led to penalties and a balance of more than $300.

Sounds like Providian changed its name. 

Big Fees for Little Credit
By DAN MITCHELL

SOME issuers of credit cards are “quietly collecting hundreds of millions of dollars in profits selling nearly worthless, predatory credit cards targeting vulnerable consumers, including those with bad credit,” according to a report published this week by the National Consumer Law Center (consumerlaw.com).

How “quietly” these companies are operating may be open to question. But the report states that some companies issue cards with the sole intent of collecting fees from gullible customers — not offering them credit.