Unbelievable... 39.9% APR!

Peet

I had one of those offers once. Burnt nicely in my fire!

Tr@cker

'The rate reflects the risk the lender is taking on'

Yeah thats the obvious reasoning but surely, if the perceived risk is greater lending to people who have had past problems-people who are least able to pay- then the risk of them defaulting must be even GREATER by asking them to pay much more interest than average.
The institutions have always had a very peculiar logic to me.

helping_hubby

I think they send them to everyone. I received one a few days ago, but I don't have a poor credit history, debt or similar. I showed it to hubby who is in debt and was pleased by his response of shock at the interest rate. I think he's learning

MABLE

Go for it!

bert&ernie

Tr&#64 wrote: »

'The rate reflects the risk the lender is taking on'

Yeah thats the obvious reasoning but surely, if the perceived risk is greater lending to people who have had past problems-people who are least able to pay- then the risk of them defaulting must be even GREATER by asking them to pay much more interest than average.
The institutions have always had a very peculiar logic to me.

I'm sorry but I think it is you that has the twisted logic. Perhaps you think that lenders should subsidise sub prime customers by increasing rates for their prime book?

Its quite simple really - sub prime products carry a higher risk of default. The lender must balance this against a higher rate of return from this lending. The rates may he higher, but credit lines are also significantly lower - perhaps only £200. In fact, it is not unusual for the lender to ask for a deposit from some customers.

Sub prime cards are also more costly to issue and service than prime. Wholesale borrowing is likely to be more expensive and collection and recovery costs are also likely to be higher.

Just because the rate is high, it doesn't mean that the lender is irresponsible. People who have had past problems are not necessarily the least able to afford credit. Conversely, many people in this situation are very well aware of what they can afford to repay. No lender, sub-prime or otherwise, has any interest in their customers getting into difficulty

Phoenix79_2

Tr&#64 wrote: »

'The rate reflects the risk the lender is taking on'

Yeah thats the obvious reasoning but surely, if the perceived risk is greater lending to people who have had past problems-people who are least able to pay- then the risk of them defaulting must be even GREATER by asking them to pay much more interest than average.
The institutions have always had a very peculiar logic to me.

So you think defaulters and people who don't pay back money on credit cards should get better rates and deals than people who have perfect credit history?

p.s I thanked you by mistake!