Hi, I really didn't believe in credit cards but I understood the game enough to explain it and help my xwife build pertty good credit. After time went by and we broke up I left everything with her and the kids and was eager to build my credit and realized I don't know as much as I thought. I really don't understand the difference between prime and sub, I know one thing, one card I accepted from Household Bank has an annual percentage rate of 44.10%, that's gotta be crime! The corresponding annual percentage rate is 24.40% but the annually percentage rate is 44.10%. What is the difference between these 2 charges?(It took a little guts to ask these questions so be a little soft on me. No one threw rocks at Donna about balance transfers so I thought I'd give it a shot.) ;-( This stuff is confusing to me. When I call to ask the bank these questions they can't give them justice. If you have a 680+fico will that get you into primeland, or will you will you still be solicited crime? How do you know the difference between prime and sub? thank you very much,kev
RE: prime is in the eye of the ..really. if you're paying 24.%, then 19% might be prime to you, if you paying 19% then 13% may be prime, if you're paying 9% then 8.50% might be prime. and so on..
Kev-- The APR is the ongoing rate for carrying balances. The corresponding annual rate shows the true annual rate for a particular billing cycle in which the account was charged other fees. The corresponding rate will usually be the same as the APR but will be higher for instance when an annual fee is imposed or a transaction fee is charged for cash advances. The terms "prime" and "subprime" are inexact and you can't always tell by which company issues the card. For example, Nextcard is prime if you have the platinum plus with a fixed 9.9 apr or the standard visa but sub-prime if you have the horizon or milestone. Generally, prime cards are likely to have a lower APR, a grace period, offer convenience checks, balance transfer options, no annual fee and good perks and rewards. Subprime cards will have interest rates around 20%, may offer no grace period, will always have an annual fee and may have other fees for processing applications and maintaining the account.
My definition of prime: Platinum or equivalent, no annual fee, $5000 or more, apr < 13%, rewards, online access. Gray area: No annual fee, $2000-$5000, apr between 13% and 18%, online access. Subprime: annual fee, <$2000, apr>18% Hell: annual fee, initiation fee, processing fee, <$1000, apr>25% If you have a FICO of 680, then you should be in gray to prime, depending on the length of your history and tha baddies you had in the past That's my scale, hope this helps
I don't include credit limits in my definition of "prime". Although most if not all platinum cards are prime, I can think of many standard cards with credit limits below $5K that I would consider prime because they require good credit and have reasonable APRs.
RE: Credit Card Scale Sorin, I've been having similar thoughts recently. I came up with this: Prime: APR less than 14%, no annual fee, balance transfer offers, usually limits of at least $5000. High Average: APR from 14% to 18%, no annual fee, usually limits of at least $2000. Low Average: APR from 18% to 22%, no annual fee, no minimum limit. Subprime: APR from 22% to 26%, annual fee, no mimimum limit. Graveyard: Interest and annual fee combined over 26% per year, usually limits of no more than $1000, application fees, any fee is possible. By these standards, my Capital One and Aspire cards are still graveyard, but Providian has recently upgraded me to subprime. All my retail cards are low average, except for my Associates gasoline cards, which are subprime. My Associates Visa is subprime. My Click Citi card is High Average, and my Chase and Citibank cards are prime EXCEPT: Chase limit is only $1000, but at 9.9%. Citibank APR is 6.9% for years (until paid off,) but new purchases would still be at 17.9%. Limit is only $3000. I really lament the lack of AVERAGE cards, which used to be so common. It used to be that almost every card had an APR of 18%, the legal limit. If you had a high income, you simply never carried a balance, so there was a natural process of selection in which all balances came to be carried by higher risk groups, thus justifying the high (for then) APR of 18%. Now, the middle is getting squeezed out, and either you get to demand prime credit, or you have to settle for the graveyard.
