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Pre-Approved

10/03/2008 Leave a comment

Pre-Approved Credit Card Offers

We’ve all┬áreceived them in the mail and┬ámost of us just throw them away. I don’t. At least not right away. Some of my most entertaining reading for the day comes from the Disclosure Information chart that they are required to include with your fantastic preapproved status.

I received one in the mail yesterday, that I literally had to sit down and reread it two or three times to make sure I understood what I was reading. This one was for a MasterCard from Platinum First Premier Bank. What this turns into is, a way for the bank to make a couple hundred dollars off thousands of people that send this in….in exchange for nothing really. The worst part is, the bank continues to draw interest on the fees that they charged to your new account, as they know you won’t pay it off the first month. Unreal.

Follow me on this. The following info is assuming you get approved for their lowest credit line card available which is $250.

  1. Let’s start with the $29 Account Set Up Fee. This is a onetime fee. What I don’t get about this YOU have to pay THEM $29 to agree to be bound to their agreement that they sent to you unsolicited in the mail system. I have always believed that some things are just a cost of doing business. This is one of them.
  2. Next we have another one time fee, which is the $95 Program fee. Whatever that means.
  3. Then we have the $48 Annual fee, . Now, I don’t necessarily disagree with an annual fee as long as the card is offering you a low interest rate, which this one is at 9.9%. It’s number 4 that I am concerned about.
  4. An $84 Monthly Servicing Fee which the fine print says is billed at $7 per month. Again, in mind a cost of doing business. Shouldn’t be charged to the user.

This totals out to your first month’s bill (assuming you don’t buy anything else) to be $179. You are left with an available balance of $71 if you are only approved for $250. But wait….some additional insane fees.

  • If you are eligible and approved for a credit increase, you will be charged another $25. Each time. The earliest you can be eligible is 6 months. I think they figure you should have your other fees paid off within that time, so they hit you with this one to keep you sucked dry.
  • $11 for auto-draft payment to them (electronic monthly bill pay).
  • If you use the internet or their phone system to make a payment is $7 charge.
  • One time fee of $3.95 just for accessing your account on the Internet.

All of these fees are assessed as Finance Charges.

This is just insane. I could open my own bank with these types of terms. Seriously, where is the bank actually putting out any money? $71 of credit line is no big deal, especially after you pay that program fee.If 500 people respond to this program, the bank makes $89,500 without interest, and they don’t give you anything in return. This must be how the bank pays for a new manager’s salary.

“Tom, we need to add one more to the roster. Make them in charge of procuring foreclosed homes of the lower middle class. Now how can we pay for their salary? I know…a new credit card marketed to those that we have already foreclosed on, with enough program fees to cover their paycheck…”

No wonder our systems are falling apart in this country. How many other things like this go unchecked in the financial sectors, that federal regulators have managed to conveniently overlook?

People, start reading these disclosures before you sign up for crap like this. If you are upset about the Bail Out plan and how the government is going to rescue banks with CEOs living like royalty, then stop responding to this junk mail like this.

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