Updated November 11, 2014
At MagnifyMoney, we reward transparency, which is why we have established our Magnify Transparency score. We scrutinize financial products harder than those drug-sniffing dogs at an airport investigate your luggage. Those that can stand up to our rigorous testing and still prove to be transparent are awarded an A.
Unfortunately, it’s time we bring a failure to your attention: First Premier Bank
When I read First Premier’s claim that they wanted individuals “to receive a second chance when it comes to their finances,” my shady business radar went off.
There is nothing that is more repugnant to me than a financial institution preying on the vulnerable. And the credit cards offered by First Premier bank do just that. They serve no purpose other than to exploit people in financial difficulty.
Lets take a look at their MasterCard offering:
- Step 1: Apply for a credit card, and pay a $95 processing fee. Yes, $95 just to apply for a credit card!
- Step 2: Pay a $75 annual fee for the credit card.
As the bank admits, most credit cards only come with a $300 credit limit. So, you have now spent $170 to receive a $300 line. So, you will only have $130 of available credit.
Oh, and want to know the APR on that card? A whopping 36%!
In Year 2, the annual fee reduces to $45. But, wait. You then have to pay $6.25 per month as a monthly servicing fee. That is another $75 per year.
And it still gets even worse. If they increase your credit limit, they will charge you 25% of the limit as a fee. So, if they increase your credit limit from $300 to $400, you will be charged a $25 fee.
This type of product is outrageous, and we can’t believe they are allowed to exist. Even worse, the South Dakota Hall of Fame recently inducted Miles Beacom, First Primer CEO, into their club of famous and influential people from the state.
Why do they charge these fees?
There are 3 reasons why they charge these fees:
- By giving out a low credit line ($300) and then charging most of the credit line with fees ($170), First Premier is not actually giving out much credit at all. This is a deceptive practice, which means the plastic is a way to charge high fees with minimal credit extended.
- People in difficult situations often under-estimate their options. First Premier is taking advantage of that bias.
- Direct Mail offerings are easily misleading. First Premier gets most of their business from Direct Mail – and people do not understand from the marketing how much they are actually going to pay ($170) in order to receive a low credit limit.
We find the business practices of First Premier abhorrent. They deserve the F that we are giving them. You won’t find any of their cards on our Balance Transfer or Cash Back tables.
I have a First Premier Card – what should I do?
Your goal should be to get out of that product as soon as possible. Find a way to pay off the debt and close the account.
Be sure to keep keep an eye on your credit score. Once it gets to the mid-600s, there are other great options out there for you.
And, we would love for you to do one more thing. Complain to the CFPB. If you are paying more fees than you think you should be paying – then go to this website: http://www.consumerfinance.gov/complaint/
Make a complaint. Let the CFPB know how badly you have been treated. It is sad that this company is allowed to make money the way that it does. And it is even more depressing that the South Dakota Hall of Fame decided the CEO was worth honoring.
If you have had a bad experience with First Primer Bank (or any experience at all), we would like to hear from you. Please email us at [email protected] or tweet us at @Magnify_Money. Let us know if you have another company or financial product you’d like Goofski to sniff out.