PERSONAL FINANCE: SUBPRIME CREDIT CARDS 1

Credit card applicants or holders who have a credit (or FICO) score below 600 or a credit risk rating of R5 & higher are given subprime credit cards.

There are major and small issuers and financial institutions who specialize in subprime credit cards, some of whom are predators, do not make full disclosures, and even drop a borrower into a subprime category just to be able to charge a higher interest rate. (Caveat: the pre-approved credit card you receive in the mail –with free membership fee & other enticements– may be subprime.)

Subprime cards carry extra fees and low credit limits. Huge penalties are levied on late payments and exceeded credit limits. Interest and penalties can add up to 3 – 5 times of the cost of a regular credit card.

Images from Microsoft Clipart