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Credit cards are a sure fire way of not making money ! But this credit card has an extra special rate !
A Credit Card with an APR of 57.8% ! How can I refuse ?
Like everybody else, I guess, I am constantly receiving offers through the post from credit card companies and loan companies. Some of them offer 0% balance transfers (with strings attached of course) , which I sometimes take up if it works out to my advantage. The rest usually just end up in small pieces in the bin.
Today, however, I received the good news from a certain Morgan Stanley that I have been offered the chance to 'upgrade' to 'premier customer status' mmmmmmmm 'premier customer status' . You know your in trouble when they start offering you that. They also said they would make my life easier (I wish) and that my new card had already been approved! Cool.
Well, I had a cursory glance at the details on the first page, then quickly turned over to see what interest rate we lucky upgraded customers would be offered. 0% would have been good, less than 5% would have been average, but nevertheless worthy of a swift trip to the bin, 17% would have been exceedingly excessive and would have merited a ritual burning at midnight at my local coven. So you can imagine my shock/horror when I saw proudly emblazoned in bold letters on the back page the 'premier customer' rate of 57.8% !
My first reaction was amazement. I felt like I should reach for the garlic or a crucifix - get the behind me Stan ! My second reaction was amusement, I thought it was a misprint and they had just printed out 50 million brochures with the wrong figures - I thought they probably meant 5.78%. Nevertheless, for the sake of knowledge and accuracy, I decided to delve deeper into the murky world of the small print and discovered, to my amazement, that this rate was incredible but true, due in large part to the £275 fixed anual fee n(i.e. every year as a premier customer I benefit from the privilege of giving them £275 ! (that's 550 US$ if you are reading this from the USA) ) and also due to the way they are obliged to use an amount of £1500 for their calculations. I quote "The typical 57.8% APR has been calculated using the Consumer Credit Act regulations which require us to use a notional amount of £1,500 of credit. The £1,500 limit, coupled to the £275 fixed annual card fee, make the APR fee look very high." You ain't wrong there Stanley !
"The APR in your agreement will be calculated using a greater amount of credit of £7,500 which more accurately reflects the credit limit of an xxxxx Card. The APR in the agreement will be 22.0% APR . None of this changes the actual interest rate that applies to your xxxx Card which is 13.9% for purchases."
So, according to them, the real rate we are looking at is 13.9% (for purchases). Any cash advances get whacked with a hefty 3%. fee. Plus all this costs you £275 a year for the privilege, but at least you can sleep soundly at night safe in the knowledge that you are a 'premier customer' (you can't argue with that logic!) And don't forget of course that if you ever miss a payment you'll need to add fees to your own personal debt mountain and compound interest.
In the interests of balance and impartiality here is one of the 'financial benefits' I will get with their lovely card - 'VIP airport lounge access' mmmmmmmmm donuts ! Unfortunately I haven't been on an aeroplane for almost 25 years, and I have no interest in hobnobbing with mindless VIPs, so I think I can live without that particular premier perk. Their marketing department really did a good job when it picked me out for upgrading !
If you need good information about debt and credit cards have a look at Martin Lewis's site in the links. He does an incredible job keeping up-to-date with all consumer credit issues. Good luck and have a good day !