ForumsFinancing Tips

Yes, Try this One card, offered by South Dakota-based First Premier Bank, features a
$250 credit limit, but new cardholders are automatically hit with a $95
program fee, a $29 account set-up fee, a $48 annual fee and a $6
monthly participation fee. That's $178 in immediate debt, which leaves
only $72 in actual credit.
LUCKIEST

What these cards originally did many years ago was request you send in an amount of money to open a savings account which they held to secure the line of credit for as long as you kept their credit card.

Now what they are doing is charging you a fee instead which amounts to the same thing. I guess they figure it saves time because you don't have to wait until the account is set up (processed). There may also have been a legal issue with them doing that but I'm not sure. Companies have had class actions filed against them for doing less.

Many of them know if you are applying for their card, you can't get accepted for a regular credit card.

What you have to watch out for is the interest rate.

Premier will usually grant you a line of credit for $300. Then charge the fees (around $150) instead of you opening a savings account with them. I believe they charge a 9% interest rate which is low. The problem begins when you miss your minimum monthly payment which is what usually happens with people that can't get a regular credit card.

As long as you make your minimum monthly payment, your interest rate stays the same. Once you miss payments, the rate increases to say, 24% ( very high). I believe if you then make a certain amount of payments on time, they will lower your interest rate again to 9%.

I once had a card through a company with a limit of $400. I got behind for a short time then paid it off in full. The company closed my account because I paid it off. Then they put on my credit report that I requested the account to be closed which was not true.

As with any contract, you must read the fine print. I thought paying it down to a zero balance was a great thing. It wasn't for that company ( Providence? I forget the name ) because they can't make money on fees they can't charge me when the balance is zero.

I remember to apply for a credit card BUSINESS at capital one, lol. They generously allowed me a $500 line of credit which I closed 5 minutes later. The same week, I had a $12,000 line of credit with AMEX open, which I closed and paid off few years later.