Subprime Credit Cards May Look Really Good but Can Be Predatory with High Interest and Fees

Subprime cards often cost more than prime cards and target consumers without advanced education

Not all credit cards are created equal. Beyond the network logo, Visa, American Express, Discover or Mastercard—terms vary widely based on credit history and other factors. In North Carolina, consumers with limited credit options are often steered toward subprime cards with hefty fees and sky-high interest rates. Those offers can seem attractive in the moment but may trap you in a cycle of debt.

Best customers get the best cards

If your credit score meets or exceeds the issuer’s threshold, you qualify for cards with top rewards, low rates and minimal fees. Applicants with lower scores usually see offers for cards with no rewards, high annual fees and interest rates that exceed 25 percent APR. Those subprime specialists count on late fees and interest to boost their profits.

Improve your credit to improve your offers

Raising your score is the most reliable way to access better cards. Pay down balances on high-rate cards before you make new charges. Make on-time payments and keep your utilization under 30 percent. In North Carolina, free credit-counseling services are available through the North Carolina Department of Justice’s Consumer Protection Division and local nonprofit credit counseling agencies. Taking advantage of those resources can put you on track for prime-rate cards.

Easy approvals can cost you

Subprime issuers market to people who struggle to qualify elsewhere. They offer quick approvals and initial credit lines but tack on multiple fees, application fees, monthly maintenance fees and penalty fees that can exceed $40. Once you miss a payment or exceed your limit, penalty APRs and fees can cut your available credit in half and add hundreds of dollars to your balance each month.

Watch for aggressive mail offers

Unsolicited credit card mailings often include time-limited “preapproved” offers. The Consumer Financial Protection Bureau warns these may carry hidden fees and inflated rates. In North Carolina, the state’s Consumer Protection Act requires clear disclosure of fees and rates. Review the fine print and compare offers at least three days before you decide. If an offer pressures you with “call now” or “limited time,” step away and check competitor rates online or with a credit union.

Lengthy agreements may hide fees

Subprime card agreements can run dozens of pages with dense language. Those contracts often bury fees and penalty rates deep in the text. By contrast, many prime-rate cards use shorter, clearer agreements written at a lower reading level. If you see an agreement that reads like legal code, consider walking away.

Know every fee

Before you sign, identify all fees: annual, monthly, application, late payment and over-limit fees. A card with a low advertised rate can still cost hundreds in add-on charges. Use North Carolina’s online rate comparison tools or consult a local credit union to find transparent options.

Check a credit union

North Carolina credit unions often offer lower rates and fewer fees than national subprime issuers. You can join many local credit unions based on your employer, profession or community. Credit unions operate on a not-for-profit model and tend to approve members with moderate credit scores at fairer terms.

Resources for North Carolina consumers

• NC Department of Justice Consumer Protection Division: file complaints and get guidance
• North Carolina Credit Union League: find local credit unions and membership rules
• Community nonprofit credit counselors: free debt-management advice and credit counseling
• Federal Trade Commission at ftc.gov: general credit card rights and dispute process

By understanding subprime tactics and using local resources, North Carolina consumers can avoid predatory cards and secure credit products that build wealth instead of debt.