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Posts: 13,355
Registered: ‎12-30-2011
Re: Not Good - Consumer agency backs down on card fees
[ Edited ]

pipeguy wrote:

Revelate wrote:



So if 30% of their people basically run up $300 and then don't pay it, that may well be reasonable.  At their strata, they're extending credit to some folks who do exactly that... and I know for one subprime lender I worked at, 30% default rate was a fact of life at one point.

Perhaps in that one case, however national default rates (MC/V/AE & Disc) including major sub-prime lender Capital One, are running less than 3% and no more than 5% for the 4th Qtr of 2011 and 1st Qtr of 2012 - nowhere near 30%. First Premier actually reined in their up front charges, they used to be much higher where a $300 CL had maybe $50 to $75 available credit after up front fees plus no grace period on 36% or more APR interest. I don't care how high the expected default rate is, that's just plain Mod Cut of their captive customer base.  

It just depends: I can assure you C1 isn't the bottom of the barrel as far as subprime lending goes... they wouldn't even touch me for an auto loan for example  As stated, I've worked at a subprime lender who saw that default rate (it was actually higher) during one of their periods, I didn't just pull that percentage out of the wind.


There's a long way between any of these cards and their costs, vs. the Pay Day Loan places... and if you've ever done the math on those, they are way, way worse than anything FP has ever done.  As a result, FP could start lending down towards that strata, vis a vis similar to places like Cashcall with their high APR's, but you compare this to the fees that some places charge, which result in 300%+ APR's, and there's still a lot to be said for those for people in those situations.  Plus, FP (and even Cashcall) report to the bureaus, so if you *do* use them responsibly, that helps your credit reports and the resulting scores, and can get you out of the hole that some folks (including myself) wound up miring themselves in.


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