Subprime Credit Card

AAA

DEFINITION of 'Subprime Credit Card'

A type of credit card issued to people with substandard credit scores or limited credit histories. These cards will typically carry much higher interest rates than credit cards granted to prime borrowers; they also come with extra fees and lower credit limits.

Subprime credit cards are issued by both major issuers and smaller financial institutions that focus only on subprime lending.

INVESTOPEDIA EXPLAINS 'Subprime Credit Card'

The subprime credit card industry has seen some controversy as accusations of predatory lending practices have been documented. Predatory lending can lead to a borrower not knowing the full extent of the fees they are paying; some subprime cards carry covenants that can cause the interest rate to spike if a payment is late or the card holder exceeds his or her limit.

Interest rates on subprime credit cards can run as high as 30% and should be used with great caution by individuals seeking a source of credit.

RELATED TERMS
  1. Prepaid Credit Card

    A card issued by a financial institution that is preloaded with ...
  2. Predatory Lending

    Unscrupulous actions carried out by a lender to entice, induce ...
  3. Affinity Card

    A type of credit card issued by a bank and a charitable organization ...
  4. Consumer Credit

    A debt that someone incurs for the purpose of purchasing a good ...
  5. Credit Card

    A card issued by a financial company giving the holder an option ...
  6. Open-End Credit

    A pre-approved loan between a financial institution and borrower ...
Related Articles
  1. Credit & Loans

    How To Dispute A Credit Card Charge

    Follow these steps if you've been ripped off or spot an error on your bill.
  2. Credit & Loans

    Credit, Debit And Charge: Sizing Up The Cards In Your Wallet

    Not all plastic is equal! Learn the difference between the three kinds, and how each can affect your finances.
  3. Retirement

    Understanding Credit Card Interest

    Paying these rates can impact your disposable income and your investment returns.
  4. Credit & Loans

    Digging Out Of Personal Debt

    Find out why good intentions can put consumers in an even bigger hole than before.
  5. Investing Basics

    Subprime Lending: Helping Hand Or Underhanded?

    These loans can spell disaster for borrowers, but that doesn't mean they should be condemned.
  6. Options & Futures

    Cut Credit Card Bills By Negotiating A Lower APR

    Reducing the rate charged on your credit card balance is the first step to getting out of debt.
  7. It's tough to get a credit card when you move to the U.S. with no Social Security number and no American credit history. Here's how to get started.
    Credit & Loans

    Top Credit Card Options For International Students

    It's tough to get a credit card when you move to the U.S. with no Social Security number and no American credit history. Here's how to get started.
  8. Personal Finance

    What Canadian credit cards offer the best travel rewards?

    Discover Canada's best credit cards for travel rewards and the benefits that they offer. Learn how these cards can help you travel safely and happily..
  9. Building back credit after bankruptcy generally starts with getting a secured credit card. Here's how to identify the best deals among the limited choices.
    Credit & Loans

    Which Credit Cards Are Best After Bankruptcy?

    Building back credit after bankruptcy generally starts with getting a secured credit card. Here's how to identify the best deals among the limited choices.
  10. Some credit cards offer particularly good deals for holiday shoppers.
    Credit & Loans

    The Best Credit Cards For Holiday Shopping

    Some cards offer particularly good deals for holiday shoppers. Decision point: Do you need the best possible rewards or 0% interest on your balance?

You May Also Like

Hot Definitions
  1. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  2. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  3. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  4. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  5. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  6. Law Of Supply And Demand

    A theory explaining the interaction between the supply of a resource and the demand for that resource. The law of supply ...
Trading Center