First Premier Bank MasterCard

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14 posts
Kevin86475391
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Location: Texas

Re: First Premier Bank MasterCard

Postby Kevin86475391 » Mon Apr 18, 2016 11:23 pm

Hi and welcome to the forum.

unlikeu wrote:A few years ago my credit was ruined due to a job loss and lack of income. I'm sure we've all heard the story before. Luckily, I've turned that around and my income is now stable and consistent. For the past 18 months, I've been trying to raise my credit score and clear all my debt.


Congrats on turning a bad situation around! That's quite an accomplishment. I'm sure you're already doing so, but make sure to also focus on living below your means and building up an emergency savings. Of course savings can only stretch so far during a time of job loss, but everything helps.

unlikeu wrote:One of the cards I applied for a little over a year ago was the First Premier MasterCard. I was approved with a limit of $800 and would use the card and pay it off every other month. What I've noticed, however, is that after a year I was charged the annual fee of $75 and have been getting charged a monthly maintenance fee of $12.50. Despite having a 0 balance, I am still assessed this fee every month, which is frustrating.

I've tried calling their customer service line and was told that there was nothing they could do about that fee and was told it was indicated on my initial application.


Eugh! That is frustrating. Unfortunately there probably isn't much you can do at this point. It probably was in the fine print when you signed up. It's also definitely par for the course from what I hear about First Premier. They're notorious for high fees, monthly maintenance charges, and making people pay to receive CLIs.

The reality is really no one should keep them when they can qualify for any better options. To be 'fair' to First Premier they're a high risk lender who offer credit to people with very low scores and bad history. So I'm sure they do get quite a lot of defaults. Unfortunately the way they pay for those defaults while still remaining profitable is by gauging pretty much everyone who isn't defaulting on them.

Dump them first chance you get. They truly are a 'no better options' lender and no one should keep them in they're credit portfolio long term.

unlikeu wrote:I was offered a CLI of $200 as a sort of compensation (with a $35 CLI fee, go figure) which I promptly declined. Since then I've paid roughly 75% of my overall debt down and honestly don't really need this card.


Good move declining the CLI. The goal should definitely be to get away from them, not get further into bed with them.

unlikeu wrote:My concern is if I cancel this credit card after having such a short history with it, it would affect my credit score adversely. I'm intent on improving my credit score and will grudgingly pay the $12.50 if it's absolutely necessary in preserving my credit.


It's definitely not necessary. You never need to pay any fees or interest to build or maintain credit. (LOL, but by that I mean you never need to be charged them in the first place...definitely if they do charge you a fee or interest then of course you need to pay or you'd be defaulting and take a credit hit.)

Your credit took a hit when you first opened the account (as it would have with any new account from any lender). The damage was done in small part from adding a new hard inquiry and in part from decreasing your AAOA (Average Age of Accounts). Regarding AAOA basically a longer credit history is better than a shorter one. So let's say for a simple example that you had one account that was 10 years old. That would make you're AAOA 10 years. Now let's say you open a second, new account. Suddenly you're AAOA drops to 5 years ( 10 (account 1) + 0 (account 2) = 10 (total account age)/ 2 (number of accounts) = 5 (average account age) ). Going from an AAOA of 10 years to an AAOA of 5 years hurts your credit.

However, once that happens there's nothing you can do - other than waiting for things to age up - that will fix that. Opening the account and then closing it right away won't help...but by the same token it also won't hurt your credit score in the short term (it could potentially look bad to lenders upon manual review, but this is First Premier we're talking about so I'm sure they'll understand). Accounts in good standing will remain on your credit report for 10 years from the time they are closed. So if you close First Premier tomorrow it won't actually come off your credit report until 2026. At that time it could potentially reduce your AAOA again by falling off...but realistically all your other accounts will have also aged up so it's unlikely you'd see more than a very minor down blip.

In your case, however, AAOA doesn't sound like it should be a major concern to begin with. AAOA most strongly affects 'thin' credit files with just a few accounts, because again, it's an average. Your credit report is thick, with numerous credit cards and an auto loan. Your AAOA shouldn't fluctuate that much when you open a new account (or when a 10-year-old closed one falls off).

Another way it could potentially hurt your credit to close a new account is by reducing your available credit and thus increasing your utilization. From the list below and assuming the First Premier account is still in the mix with a $0 balance and $800 limit, your total amount owed is $5,162 and you have a total available credit limit of $13,400. That makes your current utilization 38.52% ($5,162 (amount owed) / $13,400 (available credit) ). Removing First Premier wouldn't affect your amount owed, but it would decrease your available credit. Thus increasing your utilization rate to 40.97% ($5,162 (amount owed) / $12,600 (available credit) ). That will hurt your credit a little bit, but I wouldn't expect it to be too significant and definitely worth it to save the money each month.

Bottom line: Close the First Premier and don't worry about it.

In general you need to try to pay down all your debt and you may prefer to focus on paying off the highest interest debt first to save the most money. I would do that actually. However, just to give you some general credit maximizing tips you could also work on bringing down your utilization on each card to under 30%:

unlikeu wrote:
Sears card: $900 bal - $3000 limit <- Exactly at 30%, pay enough to keep it below $900 instead
Capital One MC: $0 bal - $750 limit
Capital One Visa: $0 bal - $500 limit
Amazon card: $920 bal - $1400 limit <- Currently 65.7%, pay this down to $406 or less
Discover IT: $612 bal - $1000 limit <- 61.2%, pay this down to $294 or less
Credit One visa: $400 bal - $1050 limit <- 38%, pay this down to $304 or less
Verve Cad: $0 bal - $500 limit
Merrick Bank: $0 bal - $500 limit
Target Visa: $570 bal - $850 limit <- 67%, pay this down to $246 or less
Best Buy visa: $0 bal - $300 limit
Milestone card: $0 bal - $400 limit
Blaze MC: $0 bal - $350 limit
Walmart Visa: $1760 - $2000 limit <- 88%, pay this down to $580 or less

Again, that's just to maximize credit score. It's not necessarily the best financial decision because it doesn't take into account APRs.

However, I also very much agree with everyone else's advice to dump Credit One ASAP. Probably the others Nixon mentioned as well, but I'm not that familiar with them. As I understand it, however, Credit One is neck and neck with First Premier in a race to the bottom. I'd make paying off and then closing the Credit One card my first priority.


unlikeu wrote:Thanks, I'll do that then. I try to alternate between cards and carry a balance. I read an article saying in order to establish credit, it wasn't a good idea to pay off the balance every month? I usually pay off the balances every other month and alternate credit cards. If that's a fallacy I'll stop doing that.


That isn't necessary. It's important to let your credit cards periodically report a balance, but that isn't the same as carrying a balance and paying interest. Reporting a balance just refers to whether or not the card has a balance when it reports (typically a day or so after your due date, but check with your lenders to be sure). So for example let's say your Discover It card (my favorite from your list so I'm using it for the example :ppp ) starts the cycle with a balance of $200 and during the month your charge another $100, but before your due date you pay $250. That means your Discover card reports a $50 balance, but you actually paid your entire previous statement balance in full and Discover thus won't charge you any interest.

On the other hand if you started the cycle with $200, spent another $100, and only paid $150, then your card will report a balance of $150 and you will be charged interest. Or you could start with $200, spend nothing more that month, pay $150, and have $50 report, and you would once again be charged interest.

To avoid interest charges make sure to pay your statement balance in full before the due date, but any new charges for the month can report without incurring interest. You want to let each one of your cards report every so often, but you never need to pay interest to do so.

Anyway, best of luck with everything!


unlikeu
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Re: First Premier Bank MasterCard

Postby unlikeu » Wed Apr 20, 2016 2:32 am

Vattené wrote:I'll add my voice to the choir telling you to dump them. I cringe at the thought of paying that much interest just for the purposes of credit building, but monthly maintenance fees on top of annual fees and CLI fees? That is utter bullshit, and you do not need to put up with it.

You have a lot of accounts now. Don't miss any payments and they will all report positive history on you. Paying in full vs. leaving a balance won't have an impact on your credit (assuming you make the minimum payments on time and don't let utilization get out of hand). Always pay in full and you'll build good credit while not paying any interest. You could close every account suggested and they will continue to report in your history for 10 years. Then you can worry about utilization if need be. People on forums like to talk about "building relationships" with lenders; you are in an abusive relationship with First Premier. It is not your fault (you have been operating on misinformation). Dump the scumbag and move on - you don't need to have perfect credit to get into a relationship with a lender that will treat you decently.


I appreciate the advice from everyone, I have closed the First Premier Bank account as of Monday. I am able to pay the balances and I can close the other accounts as well, however, when checking my score I constantly see the notice: "too many recently opened accounts with a short credit history" or something to that effect. Is it worth keeping some of the other sub prime accounts open to mitigate this? Or should I just close the accounts?

Thanks again!

unlikeu
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Posts: 5
Joined: Sat Apr 16, 2016 1:52 am

Re: First Premier Bank MasterCard

Postby unlikeu » Wed Apr 20, 2016 2:45 am

Kevin86475391 wrote:Hi and welcome to the forum.

unlikeu wrote:A few years ago my credit was ruined due to a job loss and lack of income. I'm sure we've all heard the story before. Luckily, I've turned that around and my income is now stable and consistent. For the past 18 months, I've been trying to raise my credit score and clear all my debt.


Congrats on turning a bad situation around! That's quite an accomplishment. I'm sure you're already doing so, but make sure to also focus on living below your means and building up an emergency savings. Of course savings can only stretch so far during a time of job loss, but everything helps.

unlikeu wrote:One of the cards I applied for a little over a year ago was the First Premier MasterCard. I was approved with a limit of $800 and would use the card and pay it off every other month. What I've noticed, however, is that after a year I was charged the annual fee of $75 and have been getting charged a monthly maintenance fee of $12.50. Despite having a 0 balance, I am still assessed this fee every month, which is frustrating.

I've tried calling their customer service line and was told that there was nothing they could do about that fee and was told it was indicated on my initial application.


Eugh! That is frustrating. Unfortunately there probably isn't much you can do at this point. It probably was in the fine print when you signed up. It's also definitely par for the course from what I hear about First Premier. They're notorious for high fees, monthly maintenance charges, and making people pay to receive CLIs.

The reality is really no one should keep them when they can qualify for any better options. To be 'fair' to First Premier they're a high risk lender who offer credit to people with very low scores and bad history. So I'm sure they do get quite a lot of defaults. Unfortunately the way they pay for those defaults while still remaining profitable is by gauging pretty much everyone who isn't defaulting on them.

Dump them first chance you get. They truly are a 'no better options' lender and no one should keep them in they're credit portfolio long term.

unlikeu wrote:I was offered a CLI of $200 as a sort of compensation (with a $35 CLI fee, go figure) which I promptly declined. Since then I've paid roughly 75% of my overall debt down and honestly don't really need this card.


Good move declining the CLI. The goal should definitely be to get away from them, not get further into bed with them.

unlikeu wrote:My concern is if I cancel this credit card after having such a short history with it, it would affect my credit score adversely. I'm intent on improving my credit score and will grudgingly pay the $12.50 if it's absolutely necessary in preserving my credit.


It's definitely not necessary. You never need to pay any fees or interest to build or maintain credit. (LOL, but by that I mean you never need to be charged them in the first place...definitely if they do charge you a fee or interest then of course you need to pay or you'd be defaulting and take a credit hit.)

Your credit took a hit when you first opened the account (as it would have with any new account from any lender). The damage was done in small part from adding a new hard inquiry and in part from decreasing your AAOA (Average Age of Accounts). Regarding AAOA basically a longer credit history is better than a shorter one. So let's say for a simple example that you had one account that was 10 years old. That would make you're AAOA 10 years. Now let's say you open a second, new account. Suddenly you're AAOA drops to 5 years ( 10 (account 1) + 0 (account 2) = 10 (total account age)/ 2 (number of accounts) = 5 (average account age) ). Going from an AAOA of 10 years to an AAOA of 5 years hurts your credit.

However, once that happens there's nothing you can do - other than waiting for things to age up - that will fix that. Opening the account and then closing it right away won't help...but by the same token it also won't hurt your credit score in the short term (it could potentially look bad to lenders upon manual review, but this is First Premier we're talking about so I'm sure they'll understand). Accounts in good standing will remain on your credit report for 10 years from the time they are closed. So if you close First Premier tomorrow it won't actually come off your credit report until 2026. At that time it could potentially reduce your AAOA again by falling off...but realistically all your other accounts will have also aged up so it's unlikely you'd see more than a very minor down blip.

In your case, however, AAOA doesn't sound like it should be a major concern to begin with. AAOA most strongly affects 'thin' credit files with just a few accounts, because again, it's an average. Your credit report is thick, with numerous credit cards and an auto loan. Your AAOA shouldn't fluctuate that much when you open a new account (or when a 10-year-old closed one falls off).

Another way it could potentially hurt your credit to close a new account is by reducing your available credit and thus increasing your utilization. From the list below and assuming the First Premier account is still in the mix with a $0 balance and $800 limit, your total amount owed is $5,162 and you have a total available credit limit of $13,400. That makes your current utilization 38.52% ($5,162 (amount owed) / $13,400 (available credit) ). Removing First Premier wouldn't affect your amount owed, but it would decrease your available credit. Thus increasing your utilization rate to 40.97% ($5,162 (amount owed) / $12,600 (available credit) ). That will hurt your credit a little bit, but I wouldn't expect it to be too significant and definitely worth it to save the money each month.

Bottom line: Close the First Premier and don't worry about it.

In general you need to try to pay down all your debt and you may prefer to focus on paying off the highest interest debt first to save the most money. I would do that actually. However, just to give you some general credit maximizing tips you could also work on bringing down your utilization on each card to under 30%:

unlikeu wrote:
Sears card: $900 bal - $3000 limit <- Exactly at 30%, pay enough to keep it below $900 instead
Capital One MC: $0 bal - $750 limit
Capital One Visa: $0 bal - $500 limit
Amazon card: $920 bal - $1400 limit <- Currently 65.7%, pay this down to $406 or less
Discover IT: $612 bal - $1000 limit <- 61.2%, pay this down to $294 or less
Credit One visa: $400 bal - $1050 limit <- 38%, pay this down to $304 or less
Verve Cad: $0 bal - $500 limit
Merrick Bank: $0 bal - $500 limit
Target Visa: $570 bal - $850 limit <- 67%, pay this down to $246 or less
Best Buy visa: $0 bal - $300 limit
Milestone card: $0 bal - $400 limit
Blaze MC: $0 bal - $350 limit
Walmart Visa: $1760 - $2000 limit <- 88%, pay this down to $580 or less

Again, that's just to maximize credit score. It's not necessarily the best financial decision because it doesn't take into account APRs.

However, I also very much agree with everyone else's advice to dump Credit One ASAP. Probably the others Nixon mentioned as well, but I'm not that familiar with them. As I understand it, however, Credit One is neck and neck with First Premier in a race to the bottom. I'd make paying off and then closing the Credit One card my first priority.


unlikeu wrote:Thanks, I'll do that then. I try to alternate between cards and carry a balance. I read an article saying in order to establish credit, it wasn't a good idea to pay off the balance every month? I usually pay off the balances every other month and alternate credit cards. If that's a fallacy I'll stop doing that.


That isn't necessary. It's important to let your credit cards periodically report a balance, but that isn't the same as carrying a balance and paying interest. Reporting a balance just refers to whether or not the card has a balance when it reports (typically a day or so after your due date, but check with your lenders to be sure). So for example let's say your Discover It card (my favorite from your list so I'm using it for the example :ppp ) starts the cycle with a balance of $200 and during the month your charge another $100, but before your due date you pay $250. That means your Discover card reports a $50 balance, but you actually paid your entire previous statement balance in full and Discover thus won't charge you any interest.

On the other hand if you started the cycle with $200, spent another $100, and only paid $150, then your card will report a balance of $150 and you will be charged interest. Or you could start with $200, spend nothing more that month, pay $150, and have $50 report, and you would once again be charged interest.

To avoid interest charges make sure to pay your statement balance in full before the due date, but any new charges for the month can report without incurring interest. You want to let each one of your cards report every so often, but you never need to pay interest to do so.

Anyway, best of luck with everything!


Kevin,

I really appreciate you taking the time to go into detail with a game plan to focus on. I especially like the clarity and thoroughness of your explanation. I'm all set to pay down the remaining accounts and will take your suggestions into account when budgeting for the end of the month/next month. The explanation regarding reporting a balance vs carrying a balance makes sense. I can only cringe at all the interest and fees I've been paying unnecessarily. Rebuilding credit is definitely a bit tricky and I seem to learn more and more everyday. I certainly respect and value the advice I've received from you and the others on this site. It's definitely informative.

Kevin86475391
Centurion Member
Centurion Member
 
Posts: 237
Joined: Wed Feb 18, 2015 9:04 pm
Location: Texas

Re: First Premier Bank MasterCard

Postby Kevin86475391 » Wed Apr 20, 2016 10:24 am

unlikeu wrote:Kevin,

I really appreciate you taking the time to go into detail with a game plan to focus on. I especially like the clarity and thoroughness of your explanation. I'm all set to pay down the remaining accounts and will take your suggestions into account when budgeting for the end of the month/next month. The explanation regarding reporting a balance vs carrying a balance makes sense. I can only cringe at all the interest and fees I've been paying unnecessarily. Rebuilding credit is definitely a bit tricky and I seem to learn more and more everyday. I certainly respect and value the advice I've received from you and the others on this site. It's definitely informative.


Thanks, glad to help :)

Also regarding this:

unlikeu wrote:I appreciate the advice from everyone, I have closed the First Premier Bank account as of Monday. I am able to pay the balances and I can close the other accounts as well, however, when checking my score I constantly see the notice: "too many recently opened accounts with a short credit history" or something to that effect. Is it worth keeping some of the other sub prime accounts open to mitigate this? Or should I just close the accounts?


Unfortunately that wouldn't help in the short term. All accounts, old and new alike, are already being factored into your length of credit history, and any accounts in good standing that you close will continue to report on your credit history for another 10 years. So whether they're open or closed your older accounts are already helping to mitigate the new accounts. Once you open new accounts there isn't really anything you can do except wait for them to age up.



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