A little unpleasant business…

Experian, the credit reporting agency, notified me that First Premier Bank in South Dakota had accessed my credit report through Transunion, another credit reporting agency. Since I have never applied for a First Premier Bank credit card, I immediately called them and filed a fraud report. I also filed identity theft reports with the U.S. Postal Inspection Service, the Federal Trade Commission, and all three major credit reporting agencies.

Thinking the issue was resolved, I was surprised to receive a First Premier Bank “Platinum” Mastercard in the mail.

I again called the bank and spoke with their representative, who assured me they could see the first fraud alert and advised me to destroy the card.

But that’s not what pissed me off…

It appears to be a scam. On the mailing carrier form with the attached credit card is a greeting. “CONGRATULATIONS! You have been approved for a First Premier Bank Credit Card.”

I found that I had a ridiculously low $700 credit limit, with available credit of $613.00 as soon as I paid a $55 “Program Fee.”  Somewhat confusing as the First Payment is stated as $30.00. Additionally, “If you pay your initial Program Fee by check, we will hold the payment for up to six days. This means your Credit Account won’t be opened and available to use for transactions for up to 30 days.

Sketchy as hell until I read the accompanying program disclosure form.

Annual Percentage Rate is 36%. 

It appears that usury (exorbitant or illegally high rates) laws are state-specific, and some states do not have any limitations on interest rates as long as they were set by written agreement. Many states cap credit card interest  

“Many states have a usury law which limits the interest rate that a company may charge. Most of these laws capped interest rates at 18%. However, some states, such as South Dakota, do not have a usury law, allowing in-state businesses to charge as much interest as they want.”

According to the Federal Reserve’s G-19 Consumer Credit Report, in May 2022, the average credit card interest rate in the United States on accounts with balances assessed interest was 16.65%.

If you adjust the rate for the risk of default using FICO scores as a guideline, you might see rates like Super-prime (740 and Above)16%-18%; Prime (670-739) 20%-22%; Subprime (580-669) 22%–24%; Deep-Subprime (579 and Below) 24% and above.

Screwed!

With my credit report in their computer and a Super-prime+ FICO score, the bank decision algorithm is either screwing me without first kissing me, or this is what they do to everybody who legitimately applies for one of their cards.

If that was not enough, the bank adds insult to injury with its one-time Program Fee of $55.00, a first-year fee of $79.00 – and after that, $49 annually.

Yes, it gets worse. The disclosure also lists an introductory monthly fee of $96.00 for the first year ($8.00/month), followed by a $124.80 yearly fee ($10.40/month).

Cash Advance fees are 5% of the transaction or $8.00, whichever is greater. Late Payment and Return Item Charges are both up to $39.00.

So if I take $100 out of an ATM, assuming there is no additional service fee, I am charged $8.00 for the privilege, whereas 5% of $100 is $5 – a de facto 8% handshake.

The bank is controlled by billionaire T. Denny Sanford, the wealthiest man in South Dakota.

Bottom line…

Thank your legislators for pretending to support the poor with credit products they cannot afford while enabling financial institutions to bleed them dry.

The lesson here is that bad credit can be turned into big profits.

We are so screwed.

-- Steve