Consumer Watchdog: First National Bank of Omaha 3.25% Prime for Life Offer – Deal or not?

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Updated on Wednesday, August 6, 2014

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3.25% Prime for Life offer: Deal or not?

If you have great credit and checked your mail recently you might have been intrigued by a new deal from First National Bank of Omaha.

It offers you the Prime Rate for life if you open up its Visa Card. The Prime Rate is the low rate banks charge each other for loans. It’s currently 3.25% and has been below 4% since 2008.

And the First Omaha deal is for both new purchases and balance transfers, enough to make us stop and ask – what’s the catch? It’s too good to be true.

The Fine Print

There are two gotchas in the fine print of this deal.

The first is an $89 annual fee.

What that does is effectively increase the rate you actually pay to well above the prime rate.

Here are the all-in rates you will pay on balances based on the 3.25% prime rate and factoring in the $89 annual fee:

$2,500: 6.8%

$5,000: 5.0%

$10,000: 4.1%

$15,000: 3.8%

So unless you carry a balance of $10,000 or more it’s tough to get a really compelling rate considering there are so many 0% balance transfer deals available.

We also think First Omaha will be stingy with credit lines so you’ll be bound to paying higher actual rates.

The second gotcha is the balance transfer fee.

While First Omaha is offering the 3.5% prime rate for all balance transfers, they are tacking on a 5% fee on balance transfers. That compares to 0 to 3% for most other cards and further eats into the value of the card.

As a comparison for a $5,000 balance transfer you’ll pay $1,080 in interest plus fees and pay off your debt in 5 years if you make the minimum payments with this ‘Prime’ deal.

If instead you kept rolling your balance to a new 0% offer every 18 months with a 3% fee, but no annual fee you’ll pay just $300 in interest and fees and pay your debt off sooner.

Conclusion

While having a prime rate locked in for life sounds compelling, we’d shy away from this deal because of the $89 fee every year and high balance transfer fee.

But if you really want it – maybe you will get a $10,000+ line and be able to transfer over – give First Omaha a call at 1-800-734-5944.

The deal isn’t available online to the public as they’re only offering it to pre-screened customers, so your best bet is to call and see if they’ve matched you.