My Opinion of 1st Financial Bank, USA: Steer Clear

In honor of paying off my oldest/highest-interest credit card balance (woohoo, halfway through my CC debt!), I thought I’d share some thoughts on the card issuer—1st Financial Bank, USA. Particularly, why I think it is an exceptionally shady lender that preys on financially-uneducated students. Sure, most credit card lenders are shady, but few target students to the extent of 1FB.

Is there any good?

Before I bash them, I will admit to a couple of good things: they allowed me to found a credit history at age 18 and raised my limit like clockwork every 6 months, allowing me to maintain a decent debt/credit ratio. Except, maybe that latter bit wasn’t that “good.” I mean, do they really expect a college student to have the means to pay back ~12k? No, definitely not, but 1FB can make a decent chunk of fees if one were to charge up that amount. For the record, I never hit anywhere near that limit.

The Bad

They make it hard to pay and hard to know when to pay by providing jumping due dates, outdated Web access, no option for e-statements, no financial education tools, and limited telephone customer service hours. Maybe some research firm told them that it was good business sense for Generation Y to have access to account information via text message, but to lack a robust online portal, who knows, but if they did, they were told wrong. Regardless of my critique of their technological presence, the real issue is that they exhibited about every bad practice outlawed by the recently-passed CARD act, and are retaliating with painful rate increases and feature removal.

Preemptive CARD Act Changes

Two words: 24.99% APR. Yes, in anticipation of the CARD act coming into effect, they raised my interest rate by 10%! in October. 14.99% wasn’t great to begin with, but 25% is usury in most states (but not SD, where 1FB is based). Also, in addition to the general overdraft/late fee raising that most banks are doing, they also removed the one “reward” type feature of the card: 0% on balances below $250 (or $500 for other cards of theirs).

A good thing? They did remove double-cycle billing. Of course, it wasn’t out of the kindness of their blackened hearts; ceasing double-cycle billing is one of the major dictates of the CARD act.

When Is My Bill Due?

On the nth of the month, give or take a week. My due date constantly bounces around. It is generally somewhere early in the month, but has ranged from the 5th to the 16th. It’s a great way to trap the inattentive (or busy!) student into a late fee.

And a newer development: The online FAQ provides the following about information available online:

1FBUSA Online Services provides easy access to the following information about your credit card account: your credit limit, current account balance, amount of your last payment, date last payment received, your available credit, last statement balance and date, minimum payment due, payment due date, next billing statement date, and next billing statement payment due date. Transactions posted since the date of your last statement are also available, …

[Emphasis Mine]

However, after recent site updates, they no longer provide either a next billing statement date or the next due date. It may seem like unimportant information, but I would like to know the exact date I can see the final finance charges due on my account. Not to mention I prefer to pay the account as close as possible to the statement date, rather than the due date.

How do I pay my bill?

Oh, sorry, we’re still in the 20th century. Mail us a check with your statement stub, please. Your bank does online payments? Well, that’s some newfangled thing they’ve never heard of (ok, a little exagerated, they do provide an ACH program you can enroll in), but the bank can send them a paper check instead of an electronic payment. That’s what ING Direct does for me. The downside there is that despite it being free for me (one of the great ING features), it takes about a week to post, depending on the date 1FB receives it, since it doesn’t have the remittance stub with it, just the acct # on the check..

What about paying online or by phone, like most any decent credit card? Sure, for a $9 charge. I guess it’s the lesser of two evils: forget to send your payment and tomorrow is the due date? No problem, just pay $9 to make a payment on their Web site. Think that’s ridiculous? NP, you can just pay the higher late fee.

Want some human compassion/courtesy? Fuggetaboutit.

Don’t get me wrong, I don’t think it’s the bank’s responsibility to forgive fees right and left or for every sob story, but pretty much anywhere will give you one late payment fee pass, especially if you pay on time consistently. Does that include 1FB? Not in my experience, and I didn’t even hit the dreaded 30-day past, report to the Credit Bureaus point, just 15 days or so.

A few years ago, my grandmother passed away during December finals, right before the payment due date. The following two weeks were a mess—flying home for the funeral, flying back to school to finish my finals, driving home for the month break between semesters (and you had to be out, out, out! of the dorms within 24 hrs. of your last final). True, it’s my responsibility to pay my bill, but obviously, I was a little distracted. I forgot to send in payments for both of my cards. Two weeks go by and I realize my mistake, and send in the payments, then make the dreaded call to request forgiveness of the late fee with my story. Chase: “Sorry for your loss, miss. I see you’ve paid on time in the past. We’ll remove that fee right away as a one-time courtesy. Thank you for calling.” 1FB: “Errr, you paid late. That means a fee. You need to pay it. Yeah, you’ve always paid on time before, but it doesn’t matter. Have a nice day.”

Maybe they decided to take the tough-love approach to creating dependable borrowers. Sure.

What Can You Do About It?

If you have a 1FB card, get it paid off (consider transferring the balance to a new company’s card), find a different card to use every day, and consider closing your account. But don’t close it if it is your oldest account—that will likely hurt your credit score. If you don’t already have a 1FB card, don’t get one!

Update: closing the account might not hurt your score as much as they try to make you think it will. Read about how (not) bad it hurt my credit score to close this account in June 2010.

If you’re a just-entering-college student, verse yourself in financial literacy. Don’t use the card except for small things that you pay off monthly. And that advice applies to any card, not just 1FB-issued ones.

If you’re a parent of a young-adult, please educate them on how to handle their finances, and if possible find a way to get them a card with a company that has some sort of conscience, no matter how small it is. Any other bank seems a little better than 1FB USA.

Of course, in a dream world, we wouldn’t need to worry about getting a credit card at 18, but unfortunately, credit history is important once you graduate and enter the real world, and that’s about the only place to start.