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First Premier Credit Card: There are Better Ways to Build Credit

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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.

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. Orchard Bank® Classic MasterCards 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 ongoing APR is 14.99% - 24.99% Variable , and the annual fee is $39 - $59 the first year, $35 - $59 per year thereafter*. The Orchard Bank® Classic MasterCards 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 the Orchard Bank® Classic MasterCards is 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 MasterCard® and the Citi Secured have high APRs, but low annual fees. The Capital One® Secured MasterCard® has an annual fee of $0. The ongoing APR is 24.9% (Variable). The Citi Secured’s annual fee is $29. The ongoing APR is 18.24% Variable . 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.

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  • Kelly

    I want to thank everyone for posting about this company. I too have just received a card in the mail. I am in the process of rebuilding my credit. I have recently received a credit card from capital one. After opening that account I received this card in the mail. I never applied for it. It states that I have to pay then $49 processing fee to open it. With a credit limit of $500. Then they would charge me $125 annual fee for the first year and $49 after that plus $10.40 a month after the first year. So basically the “one time fee” turns into your annual fee and the monthly fees for the first year are paid up front. Nice try first premiere! Don’t think I will be sending them anything. I will however be holding on to the paperwork that states that if I do not pay the processing fee that I will not charged anything and my account with not be opened. I think I will stick with my capital one card and apply what I would be paying these people to them.

  • Anthony

    FROM BEING DENIED TO APPROVED FOR $1500 CREDIT. WOW! I cannot believe the negative reviews here. A majority of these reviews are from those who failed to provide a correct routing number or are 13 minutes later after the due date. Stop criticizing this bank, it is YOUR fault and YOU failed to agree with the terms, rate and fees. I have been with this card for 5 months and I have NEVER had a problem or had to contact customer support. This card helped me dramatically with my credit score.

    I had a debt on my credit report that belonged to a relative with a similar name. I was denied for every single credit card because of that debt. At that time my TransUnion score was 540 and no Equifax score. I applied for a First Premier Bank credit card and was approved after I had verified my identity with a representative over the phone. That representative was extremely nice to me, had patience and spoke very well English. A week later they sent me my orange card with my name on it with a $300 limit. I never paid the $95 processing fee. Since I had the card on hand I paid the fee with my debit card and the credit card was activated immediately. I contacted the credit bureaus and they removed that debt I mentioned earlier after sending them documents. I had a perfectly clean credit score with only a few inquiries.

    I started with $220 available credit since a $75 annual fee was deducted automatically and I registered an online account for a one-time $4.95 fee. Online statements weren’t available until a week later. My first bill came in two weeks later with a minimum payment of $30. I maxed out this credit card with only $3 left in credit, paid $100 with my debit card over the phone for FREE and was charged $5.65 in interest (36% APR). These fees were specifically on the terms and I was not charged for any additional fees within during the 6 months of use.

    Within the first 3 weeks my TransUnion score went from 540 to 610! Another week later my Transunion score jumped to 620! After 5 months my Transunion is now 690 and my Transunion is 680!!! All with just ONE secured credit card. All you have to do is pay the minimum payment, THAT’S IT! I don’t understand why some people can’t follow that simple rule. Yes, I was a bit awry about the fees but I did it for the sake of my credit and guess what? I was JUST APPROVED for a $1500 credit limit with Capital One who DENIED me before I applied for this card. I don’t even need this card anymore, but as long as its open my score keeps going up and up. I recommend this card temporarily until you resolve your credit crisis.

    Thank you First Premier Bank!

  • Edward

    I just recently got 1 of these cards so what say here is really what happens with this card. I got the card bought $50.00 in gas and $87.00 groceries. A week later I logged in to their website and set up to make a payment from my checking account for the total balance including the $75.00 annual fee. The payment was scheduled for the next day. Electronic draft from my checking account. Should be pretty easy and fast… Fast… not by a long shot. The money was gone from my checking account the next day as expected. However they said it could take 3 to 5 days to show up in the First Premier Bank credit card account. Didn’t even happen after 8 days. I had to call them and then they said they had to call and verify it from my bank. So we did the conference call and went thru a bunch of questions and the 24 hours later the payment showed up in my First Premier Bank account. This is sad… So then I spent some more money on the card by paying my phone bill and some fast food. Anyway I have bill pay with my checking account bank. Normally my bank does an electronic funds transfer but First Premier Bank will not do this. So then what my bank’s bill payment system does is issue a cashiers check which is guaranteed funds to the payee First Premier Bank. So the check is good right no worries there. After them having said check and cashing it they said they had to wait 25 for the check to clear. This is where they lied and the lady I was talking to at First Premier Bank admitted to what I suspected. I said “this is a scam right? I mean I know for a fact that the check they received was a cashiers check and guaranteed. And yet you need 25 days for it to clear… What?” So even after using the guaranteed check / funds the only way you can get it credited to your account sooner is to call customer service and have them call your bank and verify that the check did clear on your side. The scam is that they make it hard to pay them so it delays and gains them interest and if it’s not credited to the account on time then they have late fees. So this pushes you to the payment by phone that includes an $11.00 fee for an expedited payment. I have never seen such abuses and fully expect to see some kind of legal action against First Premier Bank in the future. This has been my experience in the last month or so July 2015 to end of August 2015.

    So if you do get this card beware… they try from many angles to get to pay fee after fee so to keep that from happening be prepared to first make a payment wait 5 days and then have to customer service and then conference call with with your bank to get the credit for the money they already have but to be a nuisance they make you go thru this phone game or you will surly be late since it takes 25 days for them to process guaranteed funds. I know I’m sorry I got this card… This can’t possibly be legal?