Is First Premier Bank a Scam?
A few years ago (in 2004), I received an email from an acquaintance regarding a credit card from First Premier Bank. First Premier operates a few banks in South Dakota but their claim to infamy lies in the abhorrent practices of their credit card services and which are targeted at the most vulnerable in our society, those who are poor or have bad credit.
If you ever receive a letter that announces "Congratulations, you are pre-approved for a First Premier MasterCard," treat it as you would a rancid piece of meat. Back then I regarded the company and their business practices no different than those of thieves, crooks and blood-suckers. Nothing in the past few years has changed my opinion of the company.
I would like to think my blog articles save lives, especially my warnings to my readers not to travel to Muslim countries, nor keep large dogs around small children, nor go work in Muslim countries. In that vein, it is important to warn my readers not to get sucked into First Premier's clutches and exorbitant fees; therefore I reproduce that email exchange from 2004. I updated some of the fees they charge which have changed over the years with notes in brackets:
dear bernie,I live in Bayonne and go to college in Jersey City. I received in the mail today a pre-approved Gold MasterCard with an APR of 9.9% on all purchases. They are not asking for any security deposit. The name of the company is First Premier Bank of Souix Falls, SD. Is this a good deal?
Signed J
Dear J,
There is almost no company in the country more disreputable than First Premier Bank. They are nothing less than master scam artists of the highest order.
If you look carefully at the fees required for issuance of the MasterCard, you will quickly see that these people are thieves, crooks and blood-suckers.
Let's examine the fees:
Account Set-Up Fee: $29.00 (one-time fee)
No reputable bank will ever charge you an account setup fee. If you ever see it on an application - run for cover.
Program Fee: $95.00 (one-time fee) This is the fee for extending credit to you.
No reputable bank will ever charge you a Fee for extending you credit that costs you more than a few points of the value of the credit. This $95.00 one time fee might be worth it if they were extending you credit of $10,000. Again, if you see something like this - run.
Annual Fee: $48.00 [$75 for the first year, $45 annually after the first year]
Some banks may charge this fee, but usually it is because they supply extra service or because the card is in high demand. But for this card it is unreasonable given the amount of credit they will extend to you, which I cover below.
Participation Fee: $72.00 Annually. Billed monthly, I have no idea what this fee is for. [Now they call it a monthly service fee - None for the first year, after first year $6.50 monthly]
If you are given the minimum credit limit of $250.00, after all the fees, you will have $72.00 of available credit as soon as you receive your card. Each month, you will also incur $6.00 for the Participation fee and if you pay the minimum amount each month and never buy anything with your new card, you will have laid out thousands of dollars just in a few years for the privilege of paying the bank their fees and interest charges.
Of course it gets worse:
All reputable credit card companies allow you to pay by automatic bank draft for no charge. These pickpockets charge $7.00 per transaction.
All reputable credit card companies allow you to access your account by Internet for no charge; these bandits assess a $3.95 fee.
And god forbid you should ever get this card - whenever they increase you credit by $25.00 there is, you guessed it, a $25.00 credit increase fee.
Suppose you want another card for your wife - that will cost you $29 annually. This will lower your available credit limit immediately.
There are other fees, such as insurance and a $3.00 charge for a copy of your bill if you request a bill that they never really sent you.
You also agree never to be part of a class action suit against them and not to take them to court.
Would Tony Soprano love these guys!
As for the interest rate, 9.9% is merely an introductory rate, I have heard complaints of the rate changing to 29.9% or more later [recent complaints at Ripoff Report report rates up to 79.9% - if you are wondering, South Dakota does not set a limit to usurious interest rates].
But how can they get away with such tactics, you ask. Simple, they spell out all their trickery and thievery right there in their Initial Disclosure [Here is a PDF copy from 2011]. It's as if a burglar left a notice of disclosure as he robbed your house. Very clever.
By the way, poor shlubs who try to cancel this card after they realize the small amount of credit available to them, find that it is impossible to cancel the card. Customer service is not there and they never seem to have received your request for cancellation until after the expiration period. All contact with them must be done by mail. And they never respond back, except to send you a bill. It's a nightmare.
Now some of my readers may wonder if I'm worried that First Premier might sue me for libel because I call them crooks and thieves. Actually, it's not me accusing them of being corrupt, blood-sucking, lying, cheating bastards - it's the Attorney General of the State of New York:
New York Times, 16 Aug 2007, First Premier Bank to Pay Penalty
New York consumers will get as much as $4.5 million in refunds from a South Dakota bank under a settlement of accusations that it used deceptive and illegal tactics to market credit cards to people with poor credit ratings.
...
The investigation was prompted by complaints from consumers who had responded to offers for a card with a $2,000 credit limit, a 9.9 percent fixed interest rate and no processing fee.
“In reality, most consumers received a $250-$300 credit line at a 9.9 percent interest rate that could more than double without notice,” Mr. Cuomo said in a statement. “Even before consumers had a chance to activate or use their credit card, First Premier billed $178 upfront fees for processing the credit card application.”
The processing fee was followed by a variety of other hidden costs that drove up consumers’ balances from $20 to $400 in a matter of months, the attorney general’s office said.
