23 September 2005
People on low incomes are being urged to shop around for credit cards after it emerged that a credit card has been launched that 'offers' a 70 per cent interest rate.
The Vanquis bank's Classic £150 card has an annual percentage rate (APR) of 69.5 per cent, and comes with a £19 annual fee, with a minimum repayment of 5 per cent each month.
The cheapest card offered by the bank, part of the Provident Financial group, is the Gold £3,000, which has a high APR of 24 per cent and an annual fee of £19.
The bank defended its offering, saying that it was catering to the needs of people who otherwise couldn't get a credit card.
David Stephenson, head of communications at Provident Financial, told This is Money: "Just because people may have County Court Judgments or bad credit history doesn't mean they should not be allowed a credit card.
"They accept they will have to take a lower spending limit and pay higher interest charges as a result. And the APRs are reduced every year if they keep their account in control."
But Which?, the consumer action group, was not so charitable.
Mike Naylor, a Which? spokesman, told the online news provider: "This is just unbelievable. Anyone with a less than perfect credit history should always go to mainstream credit card providers first.
"Many have credit scoring policies so may give you a card but at a higher rate - but nowhere near 70 per cent."
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