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Credit Cards: A new bag of tricks…

11 May 2006 1,260 views 11 Comments

Today I got an offer for a new Visa credit card. Now, most credit cards offer you incentives for signing up, a low introductory APR, low interest rate balance transfers, gift cards, and the like. But this offer was different, by signing up for this card. I could get a free Dell laptop. Needless to say, my interest was piqued.

The card, the “Upfront Rewards Visa”, is offered by Universal Savings Bank F.A. is an interesting creature. As we all know it’s never as simple as just getting the gift, there are terms and conditions, as well as the fine print of the card itself.

Well, in order to qualify for this card, you have to incur $5000 of debt with the issuer. That’s right folks, just to get the card you need to make a balance transfer of at least $2500, at which point they’ll graciously allow you to take a cash advance for the remaining $2500.

But wait, it gets better. After incuring this debt, you have to maintain a balance of at least $3500 for 18 months! If at any time your account balance during those first 18 months drops below that $3500 limit, you will be considered in default and will have the opportunity to experience all of the joys that come with being in default. Including a $600 one time charge, termed an “early pay down” fee. Fun times. But, hey, at least there’s no annual fee.

All this for a $950 laptop? Heh, no thanks! If you think for an instant that they won’t recoup their money in interest over that period of time, I have a cold fusion reactor sitting in my closet that I’d be willing to part with for a nominal fee.

Just think about what their terms will be for people they aren’t trying to woo into signing up for a card, once you’re an actual customer. I imagine it will be as pleasant as dealing with a loan shark. On second thought, it might actually be better to deal with a loan shark. At least Vinny and Bruno won’t break your knees for paying on time or early.

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11 Comments »

  • Jason said:

    The stupid little “cash this $5 check and we’ll sign you up for overdraft protection at a cost of $8 per month” schemes are bad enough.

    This Upfront Rewards Visa should be illegal. Charging a fee for paying off your balance? It’s ridiculous.

    # 12 May 2006 at 9:18 am
  • Chris said:

    Those shaddy bastards! God help the people who don’t read the fine print!

    # 14 May 2006 at 10:04 am
  • Irregular Payments said:

    More Why I Hate Credit Card Companies…

    As if I need any further reasons, here’s some more…
    A Chuck Jaffe reader received a notice similar to the one I did this weekend. MBNA (oh, have I mentioned that MBNA sucks lately? not today, so there’s your notice… ) droppe…

    # 15 May 2006 at 11:57 am
  • Stock Market Beat » No easy fix for Dell said:

    [...] Update: Maybe DELL should consider a new business model. [...]

    # 15 May 2006 at 3:42 pm
  • Craig said:

    If you read the fine print, and are OK with it, what is so bad about this?

    In our case, medical bills and car problems had put us over the limit on a card, so we had high interest rates. Along comes this Upfront Rewards offer with a, well, not exactly free computer. So what did we get? A new computer, lower rates, and an extra card. While we pay off the high interest card, we’ll just pay the minimum on this Upfront Rewards Card. It will certainly take us longer than 18 months to pay down the other card.

    So, this card was a GOOD deal for someone in our situation. It isn’t right for everyone, but it works for those in similar situations to us.

    Of course the company will recoup the money they spend on the computer. But it beats stupid free airplane miles rewards that are nearly useless to most people. And, if you are going to have the requisite amount of debt IN ANY EVENT, why not get a computer out of it?

    # 8 June 2006 at 12:49 am
  • Frank (author) said:

    Because you could transfer to a 0% APR card, and avoid paying any interest as you work your way out of debt. Instead of resigning yourself to being in debt and paying for a computer with exhorbitant interest rates.

    # 8 June 2006 at 10:11 am
  • Ethan said:

    This doens’t seem right: my law firm is taking a look at this. If anyone who has personal experience with Upfront Rewards wants to get involved, please visit this site:
    http://eplaw.us/upfrontrewards.html

    # 23 June 2006 at 1:01 pm
  • Mike said:

    I had over $5000 on higher intrest cards and no laptop. The Upfront rewards card payed of the higher intrest cards and gave me a laptop. What is wrong with that? It will take me at least 18 months to pay it down.

    0% cards more rare than chickens teeth for people with IRS liens, so I am paying a lower APR now, which saves me money (and I have a new laptop).

    # 7 August 2006 at 9:35 am
  • matt said:

    I got this card. The rates were low and I got a free computer. I can’t pay off my CC until after 18mos anyways and I’ve tried the 0% int deals and they only last for a short period of time and then shoot up to well over an acceptable rate. This card has a stable, low rate (around 10% – and that’s great for a CC) and I have a free computer that I could sell on eBay if I wanted to. I already wrestle with the CC companies with my existing debt where I’ve transferred into for the 0% rate and it always ends up higher than it should be.

    The fact is that banks have to make money and CCs are on way they tap the consumer for incremental cash flows. If that weren’t the case, then they wouldn’t exist. To get an upfront reward for promising to pay interest at an acceptable range for 18 mos while not having to constantly call the company to wrestle the rate to that level is definitely a positive thing. If you don’t like credit cards then don’t use them. The fact is that one way or another you will pay. Even if you are advocating the 0% int deals, you are going to spend your time (which in my mind is very valueable) sifting thru deals in the mail, transferring balances, waiting on hold to speak to a CS agent, etc. So if it doesn’t actually come out of your pocket, you are going to pay with time spent juggling your finances between cards to get on the 0% gravy train. Nothing’s free and if you don’t want to deal with it, then just avoid them altogether.

    # 13 August 2006 at 2:04 pm
  • Frank (author) said:

    It’s important to remember that this site is about financial responsiblity. No matter what your situation is signing up for a card with these terms is *not* financially responsible.

    As our commenters pointed out, nothing is for free, especially this laptop. You’re paying for it with the interest, and beyond that if your financial situation changes and you find yourself able to get out of debt and start on the road to financial responsibility you’re penalized.

    Regarding the length of time that 0% apr lasts on various cards. Well, it varies. I’ve seen some as short as 6 months and some as long as 2 years. But again, 0% over that period of time is still saving you over paying any interest. Even if you have to switch. Which one is obviously willing to do, if they’re even considering switching o this card.

    # 13 August 2006 at 2:58 pm
  • Minimum Debt? - The Finance Forums said:

    [...] Minimum Debt? I had never heard of this idea until I saw it in an article online. Apparently some credit card companies require people to keep a certain amount of money in their outstanding balance otherwise they’re penalized. Here is a blurb from that article I was reading: After incuring this debt, you have to maintain a balance of at least $3500 for 18 months! If at any time your account balance during those first 18 months drops below that $3500 limit, you will be considered in default and will have the opportunity to experience all of the joys that come with being in default. Including a $600 one time charge, termed an

    # 21 November 2006 at 8:24 pm