Finance Globe

U.S. financial and economic topics from several finance writers.
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The One Credit Card You Should Never Have

There are many bad credit cards out there, some of the worst contenders are those that target people with bad credit. Even with bad credit, there’s one credit card, you should definitely stay away from: the First Premier Bank Credit Card.

What’s so bad about this credit card? It’s expensive. Too expensive. Before you get the credit card, you’ll have to pay a one-time $95 processing fee before the account is opened, just to get the credit card. Then, you’ll have to pay a $75 annual fee in the first year. So, that’s $170 just to have this card. And it doesn’t pay any rewards or give any benefits in exchange for the expensive fees.

You don’t get a generous credit limit. In fact, you start out with $300 credit limit, minus the $75 annual fee and you’ll only have $225 available credit when you first get the First Premier Credit Card. That’s not much room for charging.

It doesn’t get better. The $75 annual fee drops to $45 after the first year, but a monthly servicing fee of $6.25 per month (or $75 a year) kicks in after that, bringing the year two cost to $120.

Don’t dream of carrying a balance on the First Premier Credit Card because the APR for purchases (and cash advances) is 36%. That’s well above the penalty rate for most credit cards, but far below the 79.9% APR First Premier charged a few years ago.

If you want to add another user, say your child or spouse, you’ll have to pay $29 for the additional card, dropping your available credit to $196.

You’re not stuck with the $300 credit limit forever, but First Premier isn’t the least bit generous in giving credit limit increases. Once you’re eligible for a credit limit increase, you’ll be charged a fee of 25% of the amount of the credit limit increase. Say you’re approved for a $100 credit limit increase, bringing your credit limit to $400. You’ll pay a $25 fee to raise your limit and your additional available credit will actually only be $75. But you’ll get the benefit of the full $100 once you’ve paid the fee.

Admittedly, there aren’t many other options for the types of people who would seriously consider First Premier’s credit card. People with bad credit can have a tough time getting approved for credit cards. However, no matter how slim, there are options. A secured credit card is a great alternative. You may be able to get a secured credit card with a deposit as low as $49 from Capital One. Otherwise, you can pay the full $200 for a $200 minimum credit line. And, if you’re responsible with the card, your security deposit can be refunded. That’s not the case with First Premier’s credit card.

First Premier's card may be the worst of them all, but there are other credit cards that are similarly bad – high annual fees and APRs and low credit limits. As much as you may want to rebuild your credit, the high fees aren’t worth it. A good secured credit card is a much better route.
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Thursday, 22 August 2019

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