ADVERTISER DISCLOSURE

Please Don’t Get a First Premier Credit Card

first-premier-bank

The Aventium and Centennial credit cards, offered by First Premier Bank (or 1st Premier), are among the very few credit cards offered to those with bad credit and may seem attractive to people who don’t qualify for almost any other card. However, the cards come with a low credit limit, unreasonably high fees, and a number of “gotcha” charges that riddle the cards’ fine print. In fact, the two cards are exactly the same – always a red flag. The Federal Reserve tried to make lending more transparent in 2010. First Premier did an end run around them, and Aventium and Centennial are the results.

1st Premier’s “perks” for Aventium and Centennial: high APR and higher fees

The two credit cards come with an astronomical interest rate: 49.9% the first year, with the possibility of a minor reduction to 39.9% thereafter. For comparison, the industry average for those with poor credit is 23.95% – less than half of the Aventium/Centennial’s. First Premier is notorious for its high interest rates: previous iterations of the Aventium and Centennial came with 79.9% and 59.9% APR’s, but were yanked after public pressure.

First Premier Aventium security deposit

The cards also have a $75 annual fee the first year – 25% of the cards’ credit limit, the maximum first-year fee allowed by the Credit CARD Act of 2009. Essentially, the card only has a $225 credit line, after fees. That fee is lowered to $45 a year after that, but is supplemented by a $6.50 monthly fee, for a total of $123 a year – more than one-third of the credit limit.

These unsecured cards come with a secret: they’re actually secured credit cards. In the cards’ very, very fine print is a requirement that account holders make a “security deposit” of $95, which will be refunded when the account is closed. This makes the cards almost like secured credit cards, but with even higher fees and interest rates!

First Premier vs. the Fed: a cat-and-mouse game

Before the Credit CARD Act, First Premier’s terms were even more egregious. An unsecured Visa with a $250 credit limit included:

  • • A $35 processing fee
  • • A $119 acceptance fee
  • • A $6 monthly fee ($72 a year)

That adds up to $276 in fees – more than the credit limit. The CARD Act stipulated that the first year’s fees can be, at most, 25% of the card’s credit limit, prohibiting this practice. The Visa could cost, at most, $62.50 in the first year.

Not to be deterred, First Premier issued a set of $300 credit limit cards with a $75 annual fee: identical triplets Aventium, Centennial and Classic. In addition, 1st Premier began charging $95 in processing fees, which were assessed before the card was approved and therefore technically did not count towards the first year limit.

“Nice try,” said the Fed, which clarified earlier this year that all processing fees are indeed part of first year’s costs. First Premier moved on to Plan B: the $95 processing fee took on its current incarnation, a security deposit.

What’s more, the Credit CARD Act regulates how much issuers can levy in fees for the card’s first year: 25% of the initial credit limit. After Year One, however, all bets are off. Because 1st Premier charges the maximum allowed fee upfront, the bank is barred from levying further charges the first year. However, as soon as the CARD Act’s protection expires, a number of fees and charges crop up:

  • • A 3% foreign transaction and cash advance fee, which are industry standard but are notable because they only take effect the second year, after the fee cap expires
  • • A $3.95 one-time fee to access online banking, whereas most banks actually reward e-statements
  • • A $6.50 monthly fee, which doesn’t seem like much but adds up to $78 a year

1st Premier Bank annual fees

By default, the credit limit is set at $300 the first year. After that, customers have the option to increase their credit limit – for a fee of 25% of the increase. To increase the credit limit by $400, then, a customer must shell out $100. This is essentially punishment for good behavior: only those who spend responsibly will qualify for a higher credit limit increase, but they will pay the highest fees.

Credit limit increase fees, combined with cash advance, foreign transaction and monthly fees, mean that you can easily pay 70% more each year you hold the card. As time goes on, First Premier really starts making the money that it couldn’t make from you the first year, and therefore destroys the Credit CARD Act’s intent to protect vulnerable consumers.

Bad credit cards that aren’t so fee-ridden

Fortunately, there are cheaper and more straightforward alternatives to the Centennial and Aventium for those with less-than-stellar credit. The Orchard Bank MasterCard is intended to help establish or reestablish credit. HSBC, which owns Orchard Bank, gave the bank the goal of helping those with the least access to credit. While it does have some fees, it is far cheaper than First Premier’s cards and offers much lower interest rates. The interest rate falls between 14.9% and 19.9%, and the annual fee is $68 the first year and $59 after that. The Orchard Bank MasterCard is among the easiest unsecured credit cards to qualify for: FICO scores as low as 500-600 have made the cut. Among the few hard-and-fast qualifications are a $12,000 salary and a valid social security number.

If Orchard Bank credit cards are not an option, a secured credit card is open to almost anyone and can help to rehabilitate credit scores. Orchard Bank also offers a secured MasterCard with an APR of 7.9% and an annual fee of $35 that’s waived the first year. The Applied Bank Platinum Zero has no interest rate, but has a high $119 annual fee and requires a deposit of $500 or more. Many credit unions offer low APRs as well as low fees. And amongst larger banks, the Capital One Secured Card and the Citibank Secured Card come with a high APR of 22.9% and 18.24% respectively (as of this writing), but have unusually low annual fees of $29. Secured credit cards require an up-front deposit, usually equal to the credit limit. This deposit will not be used to pay down a balance; it’s collateral held against default, and is returned when the account is closed.

Watch out for this particular scam: Net First Platinum offers what looks like a credit card, but is actually a fee-laden gift card equivalent that can only be spent on the heavily marked up Horizon Outlet website. Another often-cited alternative is prepaid debit cards, but these come with a number of  similar fees and do not actually help to build credit. A regular checking account serves the same purpose, but without the ATM, reloading, and monthly fees.

  • Lucky?

    I truly, truly, truly appreciate your warning. I applied for them and was “approved” but was waiting until my next payday to give them the $95 when it occurred to me to google them first because $95 is a LOT of money for me. Actually, I was going to not pay my cell phone bill just to pay first premier and then use the card to pay the cell phone. You know…robbing peter to pay Paul. Thank God I found this website. I’m paying Sprint and saving up the money to go elsewhere.

  • Nicci82

    They are the worst, so unprofessional and their fees and way of dealing with your payments are a horrific. They tell you to make a payment online and you have to do it by check, but the fail to tell you that it will take 3-5 business days to process the payment, even if the payment is early, and even if they have already taken the payment out of your checking account. They have the worst attitudes and I can’t believe that they have not been in some sort of trouble for the way they talk to people.

  • Nicci82

    They are total crooks and my experience with them for the first month I had my credit card with them was not a great one.

  • Nicci82

    For your information…you have no idea what life changing events caused individuals credit scores to drop. Some people don’t pay their bills on time, b/c they may have lost their job, using their credit to help manage doctor bills for a very sick child, or had to go on bed rest during their 5th month of pregnancy. So, in that right people do have the right to complain. Pay your AMEX/American Express and try not to focus on those of us who complain about getting ripped off when where trying to in fact build, re-build our credit.

    • Rhandi Nelson

      You are so right!!!

  • carey

    Thank You,I received a card in the mail,tore it up,it sounds like those rip-off online payday loans,I believe every word you are saying.

  • http://nerdbytez.wordpress.com/ Cupcake

    You mean the same way you’re complaining? Smh..

  • http://nerdbytez.wordpress.com/ Cupcake

    I am so sorry… sending you good vibes and some goodluck your way!

  • C Morrow-Usher

    Oooo boy let me tell you just yesterday I was VERY heated with this bank. I would not even refer this credit card to my worst enemy. I was approved last Thursday (4/9/15). Paid the $95 which was taken out of my acct ASAP on (4/13/2015). Only to hear them tell me I still have to pay another 100 bucks for annual fee. I told them shove it, I don’t want it period and to send me my money back quick. The rep tells me it will take another 13 days to send me a check out that’s company policy. I said it didn’t 13 days for you to do an electronic payment from my checking acct just reverse it. They are really rude not to mention even before I was irate I was hung up twice when I mentioned “refund”. Please anyone reading this find another secure card or slowly pay off debt when possible. This place STINKS….

    • Williams

      Thanks for sharing this post. YOU HAVE SAVED ME MONEY. I was seriously about to get a credit card with this company. I hope they give you your money back. I think ima do some reseach on wells fargo and see what they are offering. Although, i do know they have this credit card where you have to put 300.00 dollars down on the credit card instead of them putting money on the card. It sounds stupid but i guess they are protecting their selves in case you dont pay them back. The card suppose to help build credit.

      • Clarisa

        No problem… Yes Wells Fargo has a secure credit as well and do require a deposit but in the end it is worth it and you’ll see a good reflect on credit report for paying as agreed… Good Luck!

  • Ranina

    I am self-employed and got this card about six months ago because I had an emergency arise and my other cards were at their limits.
    I have since been appalled by their practices. Fraud and usury! I realized that the annual fee, exorbitant interest rates, etc. were to be expected from an outfit like this…but what really got me was the online bill pay scam:
    I paid $5 for the “privilege” of paying online. Made the first month’s payment (3 times the minimum) 5 days early. I still had a $200 credit left at that time. 10 days later, I tried using the card and it was rejected!!!
    When I looked at my online summary, it indicated that they had not received the payment, that I was in default, and the account was temporarily closed! No one notified me. When I called and finally got someone on the phone he said that my bank account number was off by one number and they were therefore unable to process it. I asked why their site said I had successfully made a payment then. (???)
    He didn’t know and I ended up making a phone payment. They “graciously” waived that fee. It took 4 more phone calls and 3 more tries to get my bank account number straightened out.

    BUT WAIT! HERE’S THE CLINCHER: I went online yesterday to read other complaints because since then they keep doing tricks like not crediting my account (I was told that they hold online payments for up to 20 days!!!) and adding false late fees. And out of the first dozen or so complaints I looked at, 3 of them said they had been told that they had wrong bank routing numbers!!!
    This company preys on naive, poor people. They have been able to depend being able to slither around in the dark. Well, social media is shedding light on them.
    next I am going to the Consumer Protection Bureau and file a complaint. (Not today, as I am too busy trying to make an HONEST living!)