Is First Premier Lending a Scam? Decoding the Controversy

Is First Premier Lending a scam? The short, and perhaps unsatisfying, answer is no, First Premier Lending is not a scam in the traditional sense. They are a legitimate financial institution offering credit cards, primarily to individuals with poor or limited credit histories. However, labeling them as not a scam doesn’t paint the whole picture. The real issue lies in the high fees, high interest rates, and restrictive terms associated with their credit cards. These features, while technically legal, often trap users in a cycle of debt and raise serious ethical concerns. They operate in a gray area, providing a service while simultaneously profiting immensely from those who are financially vulnerable.

Understanding First Premier’s Business Model

First Premier Bank, through its First Premier Lending division, targets a very specific demographic: people with bad credit or those with no credit history at all. These individuals often struggle to obtain credit cards from traditional banks and lenders. First Premier steps in, offering a lifeline… but at a steep price. Their business model relies on these high fees and interest rates, which are justified by the higher risk they take in lending to individuals deemed “high-risk” by other institutions. While there is validity in the higher risk, the predatory nature of their fees is where the controversy lies.

The Red Flags: Fees and Interest Rates

The primary concerns surrounding First Premier Lending revolve around the following:

• High Annual Fees: These can range from $75 to over $100 per year, significantly reducing the available credit limit.
• Monthly Maintenance Fees: Adding insult to injury, many First Premier cards also charge monthly maintenance fees, further eroding the available credit.
• Program Fees: Often a one-time fee charged upon opening the account, reducing the available credit even further.
• High APRs (Annual Percentage Rates): First Premier’s interest rates are consistently among the highest in the market, often exceeding 30%. This makes it incredibly difficult to pay down balances, as interest charges quickly accumulate.
• Low Credit Limits: The initial credit limits offered are typically very low, often only a few hundred dollars, making it challenging to use the card effectively.
• Lack of Rewards or Benefits: Unlike many other credit cards, First Premier cards typically offer no rewards programs, cashback, or other benefits.

Essentially, you’re paying a substantial amount of money just to have the privilege of holding a First Premier credit card, even before you make any purchases. This significantly diminishes the card’s value and makes it a costly tool for rebuilding credit.

Is It Ever Worth It? Weighing the Pros and Cons

For some individuals, a First Premier card may be the only option available to establish or rebuild credit. Used responsibly and with careful budgeting, it can be a stepping stone towards better credit. However, it requires extreme discipline. You must pay the balance in full each month to avoid accruing exorbitant interest charges.

Before applying, carefully consider the following:

• Explore all other options: Have you exhausted all other possibilities, such as secured credit cards or credit-builder loans?
• Understand the fees and interest rates: Are you fully aware of all the associated costs?
• Create a budget: Can you realistically afford to pay the balance in full each month?
• Have a plan: How will you transition to a more favorable credit card in the future?

If you cannot confidently answer “yes” to all of these questions, a First Premier card is likely not the right choice for you. The high fees and interest rates can easily lead to a debt trap.

Alternatives to First Premier Lending

Before resorting to a First Premier card, explore these alternatives:

• Secured Credit Cards: These cards require a security deposit, which typically acts as your credit limit. They are often easier to obtain than unsecured cards and can be a great way to rebuild credit.
• Credit-Builder Loans: These loans are specifically designed to help individuals with no credit history or bad credit build a positive payment history.
• Become an Authorized User: Ask a trusted friend or family member with good credit to add you as an authorized user on their credit card.
• Local Credit Unions: Credit unions often offer more favorable terms and lower interest rates than traditional banks, especially for those with limited credit.
• Prepaid Cards: While these don’t build credit, they can help you manage your spending and avoid debt.

Conclusion: Proceed with Caution

While First Premier Lending is not technically a scam, their practices are undeniably predatory. The extremely high fees and interest rates disproportionately affect those who can least afford them. If you are considering a First Premier card, proceed with extreme caution, fully understand the terms and conditions, and explore all other available options first. Rebuilding credit takes time and effort, but there are often less expensive and more ethical ways to achieve your financial goals. It is crucial to empower yourself with knowledge and make informed decisions to avoid falling into a cycle of debt.

Frequently Asked Questions (FAQs) About First Premier Lending

Here are some frequently asked questions to further clarify the complexities surrounding First Premier Lending:

1. What credit score do I need to get a First Premier credit card?

First Premier primarily targets individuals with fair to bad credit scores, typically below 620. They may even approve applicants with no credit history.

2. How much is the credit limit on a First Premier card?

Credit limits are typically very low, often starting at $300 to $500. These limits are further reduced by program fees.

3. What are the typical fees associated with a First Premier card?

Expect to encounter high annual fees (ranging from $75 to over $100), monthly maintenance fees, and a one-time program fee.

4. What is the average APR on a First Premier credit card?

APRs are generally very high, often exceeding 30%.

5. How do I apply for a First Premier credit card?

You can apply online through the First Premier Bank website or through mail by responding to a pre-approved offer, if you received one.

6. Can a First Premier credit card help me rebuild my credit?

Yes, if used responsibly. Making on-time payments and keeping your balance low can positively impact your credit score. However, the high fees and interest rates can make responsible usage challenging.

7. Is First Premier Bank FDIC insured?

Yes, First Premier Bank is FDIC insured, meaning your deposits are protected up to $250,000 per depositor, per insured bank. This doesn’t negate the problematic practices associated with their credit card offerings.

8. How can I cancel my First Premier credit card?

You can cancel your card by contacting First Premier Bank’s customer service via phone or written notice. Be sure to pay off any outstanding balance first.

9. Are there any rewards or benefits associated with First Premier credit cards?

Generally, no. First Premier cards typically do not offer rewards programs, cashback, or other benefits commonly found on other credit cards.

10. What happens if I miss a payment on my First Premier card?

Missing a payment can result in late fees, a negative impact on your credit score, and potentially a higher interest rate.

11. Can First Premier lower my credit limit without notice?

Like any credit card issuer, First Premier can lower your credit limit, typically if you are deemed a higher risk, such as missing payments. They are required to provide you with notice, although this notification might be subtle.

12. What are some alternatives to First Premier if I have bad credit?

Consider secured credit cards, credit-builder loans, becoming an authorized user on someone else’s card, or exploring options with local credit unions. These alternatives often offer more favorable terms and lower costs.