CardHub Questions Fees From Issuer Focused on Low Credit Score Holders
CardHub.com, a website designed to help consumers find appropriate credit cards, has questioned two fees put into place by First Premier Bank, an issuer that specializes in cards aimed at consumers with poor credit scores.
The first is a 25% fee on credit limit increases, both on increases the cardholder requests and on those First Premier initiates.
Thus, for example, a cardholder would be charged $50 for a $200 credit line increase whether or not the cardholder asked for the increase. In addition, the bank only allows consumers 30 days to say they don't want the increase and have their money refunded.
Card Hub CEO Odysseas Papadimitriou denounced the fee. “When you consider this [fee] together with the fact that customers have a limited window to request a reversal of their limit increase, First Premier could very well pull a fast one,” he said.
Premier’s second set of fees charges consumers $170 for their first-year credit limit of $300. This is 56.6% of the card holder's credit line and is only possible because First Premier has won a preliminary injunction in court against a Federal Reserve regulation which would have limited fees charged during the first year a card account is opened to 25% of the card's credit line.
“I suppose we’ll just have to wait and see how things play out in the courts, but the issue is interesting in the sense that we as a nation criticized regulators for falling asleep at the switch and helping bring about the Great Recession, but now regulators are facing roadblocks in trying to eliminate clearly unfair, burdensome fees,” Papadimitriou said.
“I think it’s time for credit card companies to really get on board with working together with regulators to do what’s right for their customers and the economy,” he said.