Released: November 02, 2007

Group aims at credit predators

Source: Tony Pugh, McClatchy Newspapers

A national consumer advocacy group called on Congress Thursday to pass legislation halting the growth of a particularly abusive type of credit card that targets vulnerable consumers with poor credit histories.

Advertised on television and elsewhere, so-called “fee-harvester” cards are heavily marketed to subprime borrowers who can’t obtain traditional credit cards.

The cards offer small credit limits - usually several hundred dollars - but when issued, cardholders immediately incur a number of high fees that can eat up nearly 80 percent of the available credit. While card companies reap hundreds of millions of dollars in fees, consumers receive only a trace of credit.

A new report Thursday from the National Consumer Law Center found that the cards often feature aggressive debt-collection operations, bait-and-switch offers on credit limits and card terms, and deceptive add-ons such as “credit protection” and unwanted memberships in travel and diners clubs.

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