High APR

I got stopped by a very pushy woman trying to get me to sign up for a credit card. I'm looking into getting a new credit card since Lloyds scrapped their cashback card so I listened to what she had to say.

"You get up to 56 days interest free!" she exclaimed. Before I could ask her why I'd sign up for this when there's a dozen credit cards with a 0% interest period or cashback schemes I spotted the shocking 39.99% APR. When asked she said it was for people with poor credit ratings.

I didn't realise there was such a high APR rate until now. I don't understand why banks like to offer high APR cards to people with poor credit. Surely these people are more likely to default on their payments which won't be helped by hefty APR charges? Is this just the banks trying to squeeze the last drop of money out of the poor before their eventual and total financial destruction?

Reply to
Sharon O.
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The banks are all bitching about bad debts and how they are cutting bank on lending people too much money. They are the very people who helped create the bad debts and thier attitude when asking people to pay back money only tends to make people give up on even trying to pay back loans etc. The halifax took away my wifes overdraft and demanded it to be repaid within

14 days and they really fouled things up for her and myself. After 3 months of arguing the toss with them even with help from the local branch manager it took a call from management at head office to resolve the issue by suggesting my wife opened a new account and then agreed to repay the over draft at a sensible rate! They have now got a situation where the overdraft sits in an account and i am paying them off at 25/month for years and my wife banks quite happily elsewhere. They could have resolved it by being sensible and the overdraft would have been cleared by now! They desever the bad debts for treating people so badly.

I bet there must be countless similar situations.

Reply to
linkuk

Exactly. And the bank will lose on these, so it screws the rest of them to stay in profit. I know, it's Catch 22.

Tiddy Ogg.

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Reply to
Tiddy Ogg

If the bank can get back just the money that was spent on purchases it's all profit from there. I would think the credit limit offered would be low enough for the bank to not worry too much about any losses.

Reply to
Sharon O.
[SNIP]

It is risk vs reward. When lending money to a high risk group the bank expects to loose a certain percentage through bad debt, so to make an overall profit, they have to charge more. Or, to look at it another way, the people that do pay their debts also have to pay for those that don't, plus some profit for the bank of course.

Gareth.

Reply to
Gareth

I've seen 69.9% APR cards.

Basically, yes.

Reply to
Jonathan Bryce

Was it Mark Twain who said the role of banks is to lend money to people who will least need it?

Seb

Reply to
silicono2

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