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What is prime / sub-prime - references?

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Anonymous
Not applicable

What is prime / sub-prime - references?

Hi, I did a quick search on the forum and the net, but didn't get anything I would consider "authoritative" on the subject. Most discussions are just anecdotal or very wishy-washy - they say things like "Cards from BofA, Chase, etc, are generally considered prime". This web page has a pretty good summary of the "typical" characteristics of prime vs. sub-prime. Is there any authoritative definition of a "prime" or "sub-prime" credit card? If not, how would you tell for sure what classification a given card falls into? Is there any indication on the credit reports or card statements as to how a card is classified? If there's no clear definition, how can it be (reliably) factored into credit scoring? Is a card that calls itself "Platinum" automatically a "prime" card?

To attack the issue from a different angle (concrete and specific vs abstract), here are some of my cards. Can anyone tell me if these are prime or sub-prime and why?

1) BofA (formerly MBNA) NFL Visa (Team-specific):
$12100 limit, 15.98% std. purchase APR
2) BofA (formerly MBNA) College Fraternity Platinum Plus MasterCard:
$29200 limit, 18.74% std. purchase APR
3) BofA (formerly MBNA) University Platinum Plus MasterCard:
$20800 limit, 21.24% std. purchase APR
4) BofA Platinum Plus Visa
$11000 limit, 11.74% std. purchase APR
5) BofA (formerly Fleet) Platinum Plus Visa
$10600 limit, 12.74% std. purchase APR
6) Chase Free Cash Rewards (Visa?)
$11200 limit, 10.24% std. purchase APR
7) Barclays/Juniper Midwest Airlines MasterCard
$16000 limit, 15.24% std. purchase APR
8) Citibank Citi Simplicity Rewards (MasterCard?)
$11000 limit, 17.24% std. purchase APR

None of these cards have an annual fee except for the Midwest Airlines card ($75). I Could change this card to a version of the card without the annual fee that earns 1 frequent flyer mile for every $2 spent (as opposed to 1 mile for every $1 spent with the annual fee version). I do all of purchasing with this card, and the majority of my traveling with this airline, so I think I earn more than $75 worth of extra airfare per year by using the version with the annual fee.

Any thoughts anyone?
Message 1 of 13
12 REPLIES 12
ficonovice
Frequent Contributor

Re: What is prime / sub-prime - references?

Prime vs. Subprime in my opinion is greatly overrated, but we'd all like to have the best if possible. Your cards are prime, but your interest rates are fairly high in my opinion..
Rust never sleeps and neither does my fico score...
Message 2 of 13
Anonymous
Not applicable

Re: What is prime / sub-prime - references?

Thanks, ficonovice. With 220 posts under your belt, your name doesn't really apply anymore! Smiley Happy

I honestly don't concern myself with those interest rates, because I never actually pay interest at those rates. Any balances I have are either at a low promotional rate (0%, 3%, 5%, etc), or they are paid off in full within 1 statement and never get charged interest.

I only ask about prime/sub-prime because I've read a lot of posts that claim that it affects the scoring. Is there any real evidence for that? If so, a solid definition of prime/sub-prime must exists. Can anyone provide any references to authoritative sources?
Message 3 of 13
ficonovice
Frequent Contributor

Re: What is prime / sub-prime - references?

There's very little (if any) evidence of it mattering to your Fico score. Some folks report that on some of the Fako sites it says it considers it a positive to have "Major" credit cards, but I don't think anyone has ever seen that from a true Fico report....
 
Fico wants you to have a good mix of credit and to have a good payment history on your accounts and to manage credit responsibly (not to sock drawer every card every month). Use of one or two cards is fine to indicate responsible credit usage and ideally you should keep total utilization between 1-9%...
Rust never sleeps and neither does my fico score...
Message 4 of 13
Anonymous
Not applicable

Re: What is prime / sub-prime - references?

Thanks again. Since I'm happy with the cards I have, I guess I'll just tune out any noise about prime vs. sub-prime cards (until/unless someone finds something substantial on the subject).
Message 5 of 13
haulingthescoreup
Moderator Emerita

Re: What is prime / sub-prime - references?

The only area in which I know that this might be important is that FICO scoring differentiates between "national bank cards" and others, including CU cards. (So wrong, so incorrect.) The problem is that we can't find a list of which bank cards (i.e.credit cards) are in the good category. WaMu? First Premier? Continental??????

Generally, you are safe in going with the top national banks: American Express, Discover, Citi, Chase, Bank of America. The wanna-be's would include (IMO) WaMu, Juniper/Barclays, HSBC, Capital One, National City, Merrick. The re-builders include First Premiere, Orchard, Continental, and the other bottom feeders. The big question is where the cut-off occurs, and where credit union and local bank cards fit in. I will be very, very, very angry if my USAA and PenFed cards are rated lower than a Continental card.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 6 of 13
Anonymous
Not applicable

Re: What is prime / sub-prime - references?


haulingthescoreup wrote: The only area in which I know that this might be important is that FICO scoring differentiates between "national bank cards" and others, including CU cards. (So wrong, so incorrect.)
You say "I know", but how do you know? Have you seen something on FICO's website or in a FICO credit score/report that specifically addresses some sub-type or classification of credit cards like this? Or did you just come to this conclusion via hearsay from this forum or others? I'm not trying to be argumentative, just trying to clarify the source of the information.

Message Edited by BobSki778 on 04-23-2008 10:06 AM
Message 7 of 13
haulingthescoreup
Moderator Emerita

Re: What is prime / sub-prime - references?

I got this from our my_FICO big kahuna. We shredded him, but he said that that's the way it is:

Bank Cards vs CU Cards
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 8 of 13
Anonymous
Not applicable

"National Bank" CC vs. non-"National Bank"

Thanks Haulin'! Straight from the mouth of Barry, eh? That's a pretty good source. Thanks for the link. Now, if we could just get him to tell us more about what qualifies as a "National Bank" and what doesn't, we'd be golden!
Message 9 of 13
Anonymous
Not applicable

Re: "National Bank" CC vs. non-"National Bank"

If the annual fee is 25% of the total credit line, one definitely has a sub-prime card. Smiley Wink

Message Edited by watchnerd on 04-22-2008 08:16 PM
Message 10 of 13
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