Credit history is everything. Buying a new car? You need good credit for that. Applying for a mortgage? You betcha! Even renting an apartment or shopping for a cell phone plan requires a credit pull these days.
But what do you do if your credit score has seen better days? You need to start looking for ways to improve it. Applying for a secured credit card could be the answer, and the First Premier credit card may be exactly what you need.
The First Premier Credit Card
While the First Premier credit card might not have all the features and benefits of a premium credit card, it can help you build your credit history and improve your credit score.
While this is a fully functional card, complete with a First Premier credit card app (called MyFirstPremierCard), it’s most notable for not requiring a cash deposit upfront. That makes it one of the few options that gives folks with bad credit a chance to improve it without having to make an initial deposit.
For that reason alone, the card might seem attractive, but it comes with a number of fees. Let’s take a closer look.
Is the First Premier MasterCard the Best Choice?
If you have a poor credit score and want to rebuild your credit history, you might be considering the First Premier Bank card. You also might want to consider its costs. Although the issuer doesn’t require a security deposit upfront, it more than makes up for it in the fees associated with opening and keeping the account.
First of all, opening a credit card with the First Premier Bank requires an active checking account with the institution. Opening a credit card also includes a processing fee. Depending on your score and the credit limit you’re approved for, the fee can be as high as $95.
In addition to the processing fee, you’re also charged an annual service fee, which again ranges from $49 to $125, and a monthly service fee of $6.25 to $ 10.40 (waived for the first year).
Mind you, this card doesn’t earn any rewards other than the reward of rebuilding your credit history, of course. Still, paying that much for a credit card that earns no rewards is hard to justify, particularly when you have options.
The First Premier Credit Card Is Expensive
Let’s look at an example. Once you open a credit card with a $300 limit, you will pay a $95 program fee just to open an account. You also will be charged a $75 annual fee for the first year and $45 for every year afterward.
The monthly fee on the card with a $300 limit is $6.25 or $75 per year (waived for the first year). And after taking the annual fee into consideration, the credit limit available to you initially will be just $225.
As you can see, you’ll pay $170 the first year and then $120 every year after that in order to keep your account open. That’s a lot in fees. If you can manage to put money down on a secured card instead, that’s a much better option.
Don’t Forget the High APR
If all the aforementioned fees aren’t bad enough, the credit card charges an insanely high Annual Percentage Rate. The annual APR on the First Premier MasterCard is 36 percent! If anything, this card could hurt you more than help you when you’re trying to get out of debt.
With interest rates like this, you have to be extra careful not to miss a due date. Otherwise, the costs of rebuilding credit will add up even further.
Other Credit Cards for People With Bad Credit
As enticing opening an unsecured credit card with the First Premier Bank might be, you may be better off completing an application for a secured card with another bank that charges less or even no fees. For example, you can build your credit back up with a Secured MasterCard from Capital One.
Unlike the First Premier MasterCard, this credit card charges no processing fees. You can deposit a minimum amount to your account initially, but the more you deposit, the higher your credit line will be.
If you’re not able to deposit a lot of money right away, you can ask for a credit line increase after you make five monthly payments on time. It’s a much better credit card in terms of basically everything: processing fees, annual fees and wait times to increase a credit limit.
Earn Rewards While You Build Your Credit
The Journey Student Rewards from Capital One is a no annual fee credit card that rewards responsibility. You’ll earn good cash back on all of your purchases, which will increase when you make five consecutive on-time payments.
Check out our extended list of the best cards for no or bad credit.
How Secured Credit Cards Work
In order to approve you for a credit line, banks need reassurance that you’re able to pay them back. A secured credit card is like a pre-paid credit card, usually with a low credit limit. You fund the account with a cash deposit first, and then you demonstrate to the bank that you’re able to pay your bills by making monthly payments.
The deposit lets the bank know you’re not going to rack up a tab and flee the country. If you do this long enough, your credit score will improve, and you’ll be able to get your deposit back and fill out an application for a better card.
Avoid a High Credit Utilization Ratio
One last bit of advice: try to avoid a high credit utilization ratio. Credit utilization is the ratio of your existing debt to your total credit limit. It has a big impact on your credit, counting for up to 30 percent of your score. So you want to keep that utilization ratio low.
Because credit limits on the First Premier MasterCard are so low (usually no more than $1,000), you most likely will end up using quite a bit of that credit line. To an issuer, having a high balance-to-limit ratio can seem as if you max out your credit limit every month. And that can negatively affect your score.
It’s recommended to keep your credit utilization at less than 30 percent. Depending on the limit you are approved for, doing so might not be possible.
One solution to avoid a high balance-to-limit ratio is increasing your limit, which might not be a viable option right away. In the case of the First Premier card, you cannot qualify for a credit limit increase until 13 months after opening an account.
The bank also charges you 25 percent of the increase amount to increase your limit. So, if you request a $200 increase, it’ll cost you $50. The other option to avoid high utilization might be making payments twice or three times a month, or cycle your credit.
Start Building Your Credit With Your Next Card Application
By now, you have probably gathered that the credit card options available through the First Premier Bank aren’t great. The First Premier credit card simply costs too much for little benefit. Sure, you don’t have to provide a deposit, but other costs are just too high and end up higher in the end. If you have bad credit, a secured credit card is a much better option if you can manage the minimum deposit.
Whichever card you end up getting, it’s important to start building and improving your credit score as quickly as possible. A good credit score can do a lot for you, including getting you a better credit card.