What's wrong with the credit industry?

They say it's a credit crunch that we're in... at least I think I heard someone say that... somewhere. However, the problem isn't that credit card companies don't trust consumers or that consumers don't trust the market. It isn't about failures of automakers, banks, or risky markets (sub-prime, I'm talking to you). It is that credit card companies have been fleecing customers for far too long and have finally weakened the market to such a degree that now everyone is in trouble, who isn't careful.

Take this example I got in the mail today:

It's from First Premier Bank. Never heard of them? Neither had I.

They say:

Dear Stephen Murphy,

Apply for your Platinum MasterCard card from First PREMIER Bank. Just use Confirmation #: 142 739 *** *** and visit www.60SecondPremier.com to get your credit response in 60 seconds.

Because we know that bad things happen to good people, First PREMIER Bank had created this card for those with less-than-perfect credit. So even if you've been turned down in the past, don't let that stop you.

Use your card anywhere MasterCard cards are accepted. And if you ever have questions, account access by phone is available 24/7. Plus, you will receive a credit to your account of 5% on all on-time payments for 12 months.

Wow, what a great deal! They even offer 9.9% APR on all purchases. They claim that this is one of the lowest rates available. Hmm, let's see what the initial disclosure says... 9.9% APR on purchases... goes up to 19.9% if I don't pay on time... fees include: $29 Account Set Up Fee, $95 Program Fee, $48 Annual Fee, $84 Monthly Servicing Fee (billed monthly), $25 fee every time they increase your credit limit, $3.95 Internet Access Fee... that sounds like a lot. The break down is this:

If you are approved, you get a minimum of $250 credit limit. Minus the fees put on the card before you use it... that's $71 dollars left. If you check your account online that's $67.05 of your $250 left... so they just spent $182.95 just to have the card. wow. That's 73% of your credit line used to get the card.

What's wrong with this picture? Who is this card marketed toward again? People with "less-than-perfect credit." They are the ones that need to be using up 73% of their available unsecured credit limit. This card would actually hurt their credit score, just by owning the card.

What a joke. It's hard to see how this kind of marketing is legal.

(btw, what does "first premier" mean? Can there be a second premier?)