Customers with a poor credit history are being offered a cash card with an eye-watering 183% APR.
If someone were to borrow the maximum £300 allowed and pay it off over a year, their total expenditure would come to £504.
The card comes preloaded with an agreed amount of money, which must be cleared before the customer can borrow further. The deal comes from doorstep lender Provident Financial, the parent company of Vanquis, which also targets customers with a less than exemplary credit rating.
Poor credit doesn’t make someone a sap
Provident’s latest offering has unsurprisingly angered consumer groups, not only because of the sky high APR, but also because it is targeted at those customers least likely to be able to afford it.
Certainly it is difficult to imagine any scenario where borrowing money with an interest rate of 183% would be the most attractive option.
If nothing else, the deal highlights the importance of pursuing all other avenues if you have a poor credit rating.
Vanquis or Capital One credit card
Thankfully, there are a couple of credit cards on the market that cater to this group which charge a far lower rate of interest. The Capital One Classic credit card comes with a 34.9% APR and is designed for those whose rating is not too poor, or they simply don’t have any credit history.
The Vanquis credit card, meanwhile, is aimed at those with more severe credit rating problems. That means the lender's acceptance policy is more lenient, but the rates are higher as a result.
The card comes with a credit limit of between £250 and £1,000, and has a 39.9% typical APR, but this may rise as high as 59.9% on new purchases.
Pay off debt immediately
With such sky high interest rates on offer, it’s essential you exercise extreme caution when using either of these cards.
The good news is your credit rating should have improved sufficiently to qualify you for a more competitive offering after about six months.
If you want to read more about improving your credit rating, click here.
