Ok, But What’s the WORST Credit Card?

Yesterday I wrote about the best all-around credit card. It has great features and benefits. But what’s the other side of the coin?

Via pfdigest we learn about the First Premier MasterCard from First Premier Bank. I won’t even include a link to the card.

  • Standard credit limit is $300
  • 36% APR
  • $75 first-year annual fee, $45 thereafter
  • $6.25 monthly fee
  • $95 application fee (if approved, it’s treated as a security deposit)
  • 25% of every credit line increase is charged as a credit line increase fee

This actually exists.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Do note that every time that you tell readers to check for “targeted” offers via CardMatch at creditcards.com, this little guy is presented as an option.

  2. @Gary, while that card stinks on first appearance, is it possible that the card exists as a card for people with otherwise more questionable credit histories, i.e., they’d approve folks who wouldn’t get approved for most products and need such high fees in order to counterbalance the risk that these folks are more likely not to pay bills?

  3. Yes, of course, this card provides an option for people who cannot otherwise get credit. And for them it can be worth the price to be able to use a credit card, and it does build credit. A like various prepaid products more, but those don’t report to your credit file. So it can play a role.

    That said, there are better products for that market than this one, this is one of the most egregious in that space.

  4. There are some worse cards out there believe or not. I once saw a card with like 128% interest rate plus a huge annual fee and very low limit like $300.

    How about the worst travel reward cards. I would vote for the cruise line reward cards but I’m sure there are worse.

  5. There are, of course, some who would regulate this card out of existence, but it truly demonstrates that it is expensive to be poor. I just hope that those in a tough spot will shop around.

  6. Is there a business version of this card for the poor marijuana growers in Colorado who are currently uncreditworthy due to the Feds? Or, will Eric Holder and Barack Obama let the banking system go to pot?

  7. Those who have the business version of this card get to participate in the Amex CLOSED program, wherein you actually pay extra for routine transactions with Hyatt, FedEx, etc.

  8. @EGGSS4

    Supposed scenario:
    “Dear credit card holder,
    We wish to applaud your newly earned credit worthiness by raising your credit limit $1000. You will be billed $250.”

    How is that not usury? Or worse?

    Capital One targets the market of folks with bad credit. They don’t charge these extra fees. They mainly have very high interest rates for unpaid balances.

    First Premier is preying on the ignorant.

  9. This seems like a product solely aimed at building or more likely rebuilding a credit score after a bankruptcy. You’d have to be pretty desperate for a card to go for this one.

  10. The usury laws were repealed in the 80s under Reagan which is a shame. It’s my opinion that the sellers of this type of card belong in prison not out on the street. I recently read a case where the victim applied for the card and when she realized what it was, she tried to return the card without using it even one time. Nonetheless, years later, a collection agency was still hounding her for hundreds of dollars in supposed fees including the $300 annual fee, some bogus application fee, and all kinds of other bogus expenses. Vulnerable people with extremely bad credit need more protection than sophisticated consumers who can fight for themselves. People can be ignorant for any number of reasons beyond their control, including being born into tragic circumstances, having brain damage or another serious illness that affects their ability to reason, or getting older and developing the early stages of dementia. Preying on the ignorant is not fair play. It’s just wrong on every moral and ethical level. And it should be wrong on a legal level as well in my opinion.

  11. I get agitated when I see people showing up at WM using the WM prepaid card which costs $3/load. Of course there is a nice display prominently setup pushing the card (while no-fee BB is nowhere to be found except in a small unmarked generic cardboard box behind the CS desk). Just want to tap the people on the shoulder and tell em they’re getting ripped off. But I know it would be a wasted effort as the few times I tried it, neither person cared that they could save $3, because “I’m happy because its cheaper than the fees I was paying at the check cashing place”.

    So a CC with these obscene terms probably wouldn’t be a surprise too many folks…

  12. Agree w/ Gary. A horrible product, but desperate financial times for people push them to these products. I’ve been there. Trying to rent a truck to move, but not having enough credit on a card to pay the rental security deposit. Too poor to move from a place I couldn’t afford, to one that I could. We all are quite affluent on here now, but we forget that for many people, getting access to credit, at any cost, can be a life saver at times.

    Agreed it is a horrible product, exploits those that need it, and better product exists. Without being too liberal, this is why regulation is needed at times, and why a hand-out to help those at the bottom, is a worthy investment at times.

  13. A terrible product, but there must be a market for it. Just like the payday loans that charge 10,000% APR.

  14. I’d recommend folks read up on T Denny Sanford. First Premier Bank is located here in Sioux Falls, SD. Mr. Sanford has given millions upon millions of dollars away.

    As alluded to above, First Premier Bank made its fortune by extending credit to those who other would not extend credit. That is the target of said card. While many of you can talk down about the card, the reality is First Premier needs to offer poor terms considering the risk they are taking.

    So, before you throw this card out the window, please realize the target audience. If some one get this is then runs a balance, that is a personal responsibility issue, not one where government regulation is needed.

  15. This is a great card. People should consider the gold version, with a higher monthly fee and no added benefits.

  16. Gary – another fine print

    “You have until the closing date of the billing cycle to pay your entire balance each month to avoid paying interest on Purchases. This is at least 27 days from the start of each billing cycle.”

    So no grace period AFTER statement closes to avoid interest!!! Everything needs to be paid BEFORE statement closes to avoid 36% interest, unless I am reading it wrong.

    At least they cannot rip you off on the “PREMIER Credit Protection” as with a $300 limit, the max fee is only $2.67/mo.

  17. Believe it or not, this is actually a lot better than rolling “payday loans” over cycle after cycle after cycle. That can cost an effective 400% APR.

  18. I live in South Dakota and drive by their main office every day. Denny Sanford (the creator of First Premier) has gotten enought money off cards like this to give $400 million to get a hospital named after him…

  19. sound like a card my parents used to receive application forms in the mail about 20 yrs ago. back then targeted older people w/o much info. i sent the app back with bogus info and some nasty remarks. haha.

  20. @Peachfront & Jim L. – Arkansas had some of the most restrictive usury laws in the country. These were modified in the last three years, and the protection that you are claiming for the ignorant, poor, etc. is actually a harm to them because it limits those persons’ access to credit. If you have no propane and it is 2 degrees outside, you want propane at almost any cost. Usury laws limit the institutions who will lend to these folks at the rate they are allowed to charge because banks no far more about credit risk than you do. The banks must not only compensate their shareholders, but they must hold adequate reserves on each credit to satisfy their regulators (plural as most institutions have multiple regulators). So usury laws do not help the poor, but those laws limit most access to credit that might have otherwise been available.

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