Credit Offers in the Mail
I was lamenting to some friends recently about how my husband & I get about 3-5 credit offers a week from Chase. They usually don’t come right out and brand the credit cards Chase, but by reading the credit terms, you can see who is really behind the specialty cards, like the Disney or Marriott Rewards credit cards. One of my friends commented that I must be the only person that reads junk mail.
That got me to thinking about this odd habit of mine to read the terms on credit card offers I get in the mail. Why do I bother? Well, I like trying to find the “catch” and I decided that analyzing terms on an offer in the mail would be an interesting exercise for this website.
This week’s excessive mail award goes to: MBNA. I received three pieces of mail from MBNA just today. Maybe they’re taking a page out of the Chase book. Oh well, too bad for them. I’ll touch on some points of interest from one of them.
Sallie Mae GoldOption Line of Credit (MBNA offer)
This is advertised as a “line of credit”, not a credit card. The money can be directly deposited into your bank account, rather than receiving a credit card and risking you not using it. Sallie Mae and MBNA want you to consolidate all of your high-interest non-student loan debt. You get to pick the terms for amounts between $5,000 and $25,000 for 3, 4, 5, or 6 year repayment plans. For example, if you chose a $5,000 loan for 3 years, your estimated monthly payment is $161. If you chose $25,000 for 6 years, you’d be paying $443 a month.
All payments given are based on 6.99% APR but your APR may be higher. MBNA will set your initial APR between 6.99% and 19.99% based on creditworthiness.
Um. Yeah. I’d say that’s a big catch. Big difference between 6.99% and 19.99%, huh? One’s a deal worth considering, the other isn’t.
Repayment term and payment amount are estimates which may change if, for example: MBNA changes your APR, you make a late or partial payment, MBNA assesses fees, you enroll in Credit Protection, or you take additional advances.
Notice how the “MBNA changes your APR” is not listed as a result of you making a “late or partial payment”, it’s listed prior to that as its own contingency. One last thing, the “late or partial payment” doesn’t specify this but you can bet that it includes any non-MBNA creditors. Pay any credit card payment late; watch your rate shoot up. Common, but still tricky.
You will pay a 3% transaction fee on each advance (minimum fee $5; there is no maximum).
Most credit card offers have a similar transaction fee, but there is a maximum, usually $50-75. Based on the amounts offered for loan, $5k-$25k, you’re looking at $150-$750, in addition to your loan amount. Credit card offers sometimes have to follow rules, such as capping the transaction fee, but since this isn’t a credit card offer, I’m sure the same rules don’t necessarily apply. A transaction fee with no cap sure does make this deal look less and less enticing, doesn’t it?
These are just the initial catches that made me take notice. An interesting thing to note, this is a Sallie Mae branded MBNA line of credit. They say this loan is for consolidating non-student loan debt, but the loan is deposited directly into your bank account. If you want to consolidate student loans, it says, call this OTHER toll-free # to talk to Sallie Mae. Technically, you COULD consolidate your student loan debt with this loan, they just don’t want you to think you can. (Not that I’m advocating this, it’s just a technicality that they don’t want you to realize.)
Definitely don’t jump into any of these offers without reading all of the terms and conditions. If you have any questions, do not hesitate to call and ask direct questions, to have a friend read over the terms for unseen catches or simply to shred it and wait for a more straightforward offer.
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August 23rd, 2005 at 2:33 pm
I’ve long been plagued by these mailings and I got that very same Sallie Mae/MBNA one. Looking at my own credit situation, I’m not ready to add another account (or rather I don’t think lenders are ready to extend me one). These mailings are a temptation for something I’m not really eligible for or I’m not willing to pay the interest rates they’re offering.
As a result, I’ve decided to opt out of these credit screening based mailings. You can opt out online at http://www.optoutprescreen.com or by calling 888-5-OPT-OUT. I’ll let you know how it goes!
August 23rd, 2005 at 4:26 pm
That Opt-Out Prescreen is from the credit reporting agencies.
Here’s another big one, the Direct Marketing Association. They have an opt-out site. http://www.dmaconsumers.org/consumerassistance.html One of the interesting things about the DMA is that you’ll see soliciations in your mail with the little DMA logo on the lip of the envelopes and that means they’re supposed to be abiding by the DMA Do Not Mail/Call list.
ht dna
I’m sure you’re already on this one, heck, who isn’t? The Do Not Call Registry: https://www.donotcall.gov/
Then, just to top off your experience, check out the privacy policies that are mailed to you from your creditors and banks once a year (usually in the summer) and use whatever method they say to opt out of information sharing and offers.
These opting-out methods should cut back drastically on the people that like to stalk you the most.
Glad to see you jumping on in, Carl!
August 23rd, 2005 at 4:38 pm
Actually, there’s the national Do Not Call registry, but there’s also the Massachusetts one. Massachusetts had one before there was a national one. We’re on both.
August 23rd, 2005 at 4:55 pm
Massachusetts still maintains a separate one? I think PA passed their list off to the national one and now just feeds from the national one. I wonder is Mass. has different classes that need to abide by it than the national one.
August 29th, 2005 at 10:23 am
http://www.ago.state.ma.us/sp.cfm?pageid=1235
April 30th, 2006 at 9:26 pm
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