Definition
A fee harvester card is any credit card that carries excessive fees that comprise a substantial portion of the total credit limit.
Analysis
Fee harvester cards are credit cards that are aggressively marketed to subprime borrowers that do not have access to mainstream credit options at preferred rates. Instead, these risky borrowers must choose between a variety of products, many of which have confusing and predatory terms.
Fee harvester cards charge a number of fees that are either not charged at all to normal cardholders or are priced much higher on the subprime products. These fees can include:
- Account set-up fee
- Program fee
- Monthly participation fee
- Annual fee
Example
The National Consumer Law Center issued a report in November, 2007 that named certain credit card products that were deemed fee harvester cards. A fee harvester card that they named was issued by the First National Bank of Pierre, S.D.
This “pre-approved Visa account” was stated to have a “credit limit up to $1,500.” One disclosure revealed that “most customers receive an initial credit limit of $250.” On that $250 credit limit, the following fees were deducted:
- $50 annual membership fee
- $119 acceptance fee
- $6 monthly participation fee
The resulting available credit of $75 left cardholders with only a fraction of their overall credit limit.
