"Prime" Definition

Anonymous · ‎05-30-2008

O,K., I know what the prime rate is, but......... When people talk about a "prime" card, is it reffering to A. The card charges interest according to the prime rate. B. The card is associated with name recognition, of a renowned bank. C. cls that start in the low thousands. D. Maybe all three? So, whats your definition of a prime card. Or, is prime just a slick word used for a trendy, "I finnaly made it" type of desirable popular card? Seeme like everybody is looking for one, but really what is it?

Anonymous · ‎05-30-2008

This is a topic that has been discussed several times, but it seems that it is impossible to reach a perfect definition of what a "prime" card is or draw a line between what is prime and sub-prime. However, many would agree that cards such as the American Express Blue are prime while cards from Orchard Bank are subprime. Everything else falls somewhere in between.

Prime cards are definitely not associated with the interest rate. Interest rate more has to do with rewards and other card features. For example, Amex Blue's interest rate (according to the card terms) can be as high as 16.24 while Orchard advertises an APR of 9.9, so this is not the case.

Another qualifier that has been brought up is the fees associated with a card. Subprime cards often charge monthly fees, processing fees, CLI fees, etc. However, an exception to this is the American Express charge card family: the platinum card has a $450 annual fee- higher than that of most subprime cards, however Plat is definitely not a subprime card.

You may be on to something with the credit line idea. Subprime cards generally only give low credit lines. Prime cards will give much higher CLs, but that depends not only on the borrowers CR, but also their income.

The closest I can get to the definition is that prime cards are just more selective when reviewing applications. These cards have the best terms: high credit lines, low fees, low APRs, and and a good rewards program. Maybe someone else can add more to this?

Anonymous · ‎05-30-2008

"prime" is in the eye of the beholder

I have Prime cards that a few others would think are not-

The APR on my Skymiles is 15.24% - hardly a prime interest rate.

My Junny card with a 10K CL has an outrageous APR of 18.24

Well maybe that Junny card is not prime- but it is from a prime lender.

I PIF every month- so APR is not that big of a deal anyways-

My Capital One card has an ARP of 9.9% - 8K CL = Does that make it prime?

I have many other examples from my wallet-

Anonymous · ‎05-30-2008

Akhan, I am rebuilding my credit. Learning here everyday. I see refferance to prime cards in disscussions also. i know i need better cards, and wanted a prime card someday. Then, i realized i do not understand just what that meant, in many of the general terms. I am trying to increase my knowledge of many basic credit things, as i try to improve creditworthiness. Thank you for your help.

Anonymous · ‎05-30-2008

When I think of subprime cards, I think excessive fee's like a fee to apply, maintain monthly, annual fee, high APR.

That combo is oppressive.

These cards tend to not grow with you. CL will be like pulling teeth. And APR will stay high.

Anonymous · ‎05-30-2008

Timothy, Then, a prime card would be one that "works" in each individuals case? Most other things about the card would be irrelevant then. It could be a description of one's favorite card. Thank's.

Anonymous · ‎05-30-2008

Flatbroke, Then based on your needs and Timothy's definition, consider a prime card whatever cards you would want to "stick with" once you are done with your rebuilders. This could be BOA, AmEx, Citi, or others... Like Tim said, it differs for everyone, based on your personal spending habits, financial situation and needs, etc.
So if you tend to carry a balance, a prime card would be one that has the best APR or balance transfer options. If you don't, then it wouldn't matter if the card had a 30% apr, but instead you would look at the rewards programs. Same goes if you travel a lot- most of the time people don't like cards with an AF, but in this case the Amex Plat may be a good option. Anyways, good luck to you!

Message Edited by akhan on 05-30-2008 11:31 AM

Anonymous · ‎05-30-2008

Shreco, Then a "prime" card does not really exist. No such thing, just a name. Maybe better defined as a "what's my terms card" I understand now, what all the interest, and desire is for such cards. Much thanks to all.

Anonymous · ‎05-30-2008

@Anonymous wrote:
Shreco, Then a "prime" card does not really exist. No such thing, just a name. Maybe better defined as a "what's my terms card" I understand now, what all the interest, and desire is for such cards. Much thanks to all.

There are cards that charge 200 something upon being accepted with a limit barely above that and a monthly maintenance fee to boot.

Effectively they are maxed out before the card even arrives. High Utilization, money out of pocket and they continue to bleed their customers.

For those who stumble this may be their only option but it is a nasty situation.

I skipped this step for example and went straight to fully secured BofA as my first rebuilder card. Minimal annual fee, no setup fee's and high APR.

Anonymous · ‎05-30-2008

There is no definition of prime but here are some considerations -

1) How hard is it to get the card? A prime card does not have to be elite, but if everyone could get one, we probably wouldn't consider it prime. whogavemecredit.com is a decent indicator of that and there are websites that give recommended scores for cards (though they are believed to be inflated)

2) If it is a rewards card, how good are the rewards and does the card offer a conceirge service? Considering how good the rewards program is. Does the APR seem outrageous?

3) If it is a low interest rate card, how close to the prime rate is it?

4) Given a reasonable income - will the card give credit limit increases every 6 months to a year up to say 15k? There are cards with low rates that will never top a few thousand in CL's - and this is a killer to your utilization.

5) Is there an annual fee? A maintenance fee?

In essence a prime card is a card on terms that are favorable to the borrower when compared to the market average for that type of card. A prime card indicates a lender is willing to potentially lose thousands of dollars to you and believes the chance of your repayment is such that it need not charge a inflated interest rate to compensate for this risk of default.