When you choose to get a credit card, you may wonder: What is the highest interest rate that I can be charged? The answer is that the federal government does not place any caps on the interest rates that credit card companies can charge.
Getting a credit card is a risky enough endeavor. If you get one just to help you build your credit score and you know that you’ll be able to pay it off before it accrues interest, then you may never have any issues with your credit card. However, you may sometimes encounter obstacles which prevent you from paying off your card right away, and you may begin to owe interest on your credit card. Here are some facts about credit card interest rates that may help you avoid getting trapped by the lies of credit card companies:
What is a Bad Credit Card Interest Rate?
Just how much interest you’ll owe for each untimely payment varies depending on the credit card that you get. While credit card companies are required by law to be upfront about the interest rates they’re charging, they certainly don’t have to let you know if it’s actually a good interest rate. They may tell you that it’s the best you’re going to find due to your low credit score. They may tell you that it’s an average interest rate for the time. Whether or not these claims are true does not matter to them – they only care about convincing you to get their credit card. Here are some examples of sky-high interest rates that credit card companies have actually charged in the past:
1. First Premier Bank’s Infamously Bad Interest Rate
In 2010, First Premier Bank shocked the public by issuing a card with a whopping 79.9% interest rate. Their claim was that issuing a card to borrowers with a low credit score was risky, and that the high interest rate reduced this risk for the company. Sadly, it’s likely that they trapped a number of borrowers by convincing them that it was the best they could do based on their credit rating. In other cases, borrowers may not have paid enough attention to the interest rates before signing up for the card.
Fortunately, this card is no longer available.
2. First Premier Bank’s Current Card
How great! First Premier reduced their interest rate . . . to 36%. That means that right now, they still charge the highest interest rate on their card. The interest rate is close enough to some of the other bad interest rates that they likely have avoided the bad press of their past ridiculous interest rate. Still, they likely have roped people with low credit ratings into getting this subpar card.
3. Surge Mastercard
Issued by Continental Finance, the Surge Mastercard is a current credit card with a 29.99% interest rate. While this is common amongst the ridiculously high interest rates, what sets this card apart is the fact that it also has an annual fee of $245. That means that even if you pay off the card before you accrue any interest, you’ll still have to pay ridiculous fees on the card.
What are Some Good Cards for Bad Credit?
If you have bad credit, don’t be roped into the lie that a card with a ridiculous interest rate and annual fee is the “best you can do.” While you’ll likely face high interest rates if you have bad credit, you still can find some pretty good credit cards. Here are a couple of the best options right now:
1. Indigo Platinum Mastercard
Indigo is not exactly a well-known credit card producer. However, they offer an excellent card for those with bad credit. With an interest rate of 23.9% and no annual fee, it’s a great choice if you want to build credit. It’s especially good if you’ve previously declared bankruptcy – they don’t disqualify you from getting this card even if you declared bankruptcy before.
2. Capital One Platinum Card
Designed to help people increase their credit score, the Capital One Platinum Card has a perhaps unpleasant interest rate of 24.99%. This, however, is pretty good for a card intended for those with bad credit. As an added bonus, this credit card has no annual fee.
If you’re looking to improve your credit score so that you can qualify for better interest rates, contact Build My Scores. They’re experts in helping people repair their credit and improve their credit scores.