This credit offer review is about the Gateway Bank Select Rewards Visa Platinum Card offer.
As credit card mailers go this one is fairly stark. I’m not even sure why the card offer is from Gateway Bank since the fine print says the credit card is issued by Elan Financial Services as the creditor. That’s very misleading. But even Gateway Bank isn’t Gateway Bank, the site says it is a division of Bank of Hampton Roads.
I had some major problems with this offer. The interest rate is calculated as some X factor plus the prime rate but I could find no information in the offer to tell me what the X amount was or how they determined the prime rate.
This card is also charging a 3% foreign transaction fee if you take cash out of a foreign ATM and the only way to take cash out is with a cash advance. If I read the terms correctly that foreign cash withdrawal will cost 3% of the amount plus $20 or 4% of the amount taken out, plus it will be charged at 23.99% and if you want to pay that amount off you will need to pay at least your minimum payment plus the full amount you took out by the next due date. That gets pretty expensive.
The offer consists of a white external envelope, a business return envelope, a little insert that gives you a very limited description of the rewards and a long marketing piece that tears apart and the bottom half is the application. You can also apply for the card via the web.
My first impression of the mailer was just how plain it was, did not have all sorts of inducements to investigate it further and seemed minimal.
The title on the letter is: Get your choice of rewards plus a special low introductory rate.
The rewards say that you earn one point for every net dollar you spend. The example they give shows you get $12.50 cash back for spending $1,250 on the card. That “$150 per year!” as they say.
The rewards card insert is very short on details. For example, it does not give you any idea who accepts the rewards points. It could be companies you never use. They breakdown the program by saying:
Redeem your points for a wide variety of rewards:
- Unlimited 1% cash back
- Merchandise or gift cards from leading retailers, restaurants and online stores
- Multiple travel options, including air travel, hotel stays and car rentals
The fine print on the bottom of the insert says the service provider of the rewards card is actually Elan Financial Services.
The Offer Letter – Front
The cover letter says the recipient has been pre-qualified for the Select Rewards Visa Platinum Credit Card with no annual fee. It also offer 0% on purchases for 12 billing cycles, you get $50 credit with your first purchase and you get earn rewards. So far the offer has been very short on specifics about how you claim your rewards and which merchants actually participate in the program.
The offer says after the first 12 billing cycles at 0% the interest will become a variable rate at 14.99% What is interesting is that the letter says that your payments will be applied to the lowest APRs first and anything over and above the minimum payment will be applied to the highest APR first.
Under recent credit card regulation many people assumed that payments would be applied to the highest interest rate debt first but if you read the fine print of the offer and of the CARD Act it does say ” If you make more than the minimum payment on your credit card bill, your credit card company must apply the excess amount to the balance with the highest interest rate.” – Source
The Offer Letter – Back
Here is where we finally get into the terms of the offer.
Annual Percentage Rate: 0% for first 12 billing cycles and then 14.99% calculated as some number plus the prime rate. It is not disclosed how they calculate it yet.
APR for Balance Transfers: 14.99% and this rate will adjust with the Prime Rate as well. No details.
APR for Cash Advances: 23.99% and this rate will adjust with the prime rate. Expensive!
How to Avoid Paying Interest on Purchases: “Your due date is 24-30 days after the close of each billing cycle. We will not charge you interest on purchases if you pay the entire balance by the due date each month.” This floating number of days may surprise some people since it would not be due on the same day each month.
Minimum Interest Charge: “If you are charged interest, the charge will be no less than $2.00.”
Annual Fee: None
Transaction Fees: These fees are charged on the following items:
- Balance Transfer – Either $5 or 3% of the amount of each advance, whichever is greater.
- Convenience Check Cash Advance – Either $5 or 3% of the amount of each transfer, whichever is greater.
- Cash Advance – Either $10 or 4% of the amount of each advance, whichever is greater.
- Cash Equivalent Advance – Either $20 or 4% of the amount of each advance, whichever is greater.
- Overdraft Protection – $10 per occurance.
- Foreign Transaction – 2% of each foreign purchase transaction or foreign ATM advance transaction in U.S. Dollars. 3% for foreign purchase transaction or foreign ATM advance transaction in a Foreign Currency.
- Late Payment – $19 if Balance is less than or equal to $100. $29 if Balance is between $100 and $250. $39 if Balance is equal to or more than $250.
- Returned Payment – $39
- Overlimit – $39
Information is also presented on their BalanceShield Program. it says the BalanceShield program is optional. The BalanceShield program says it “will cancel your minimum monthly payments for up to 12 months per occurrence in the event of involuntary unemployment, disability, hospitalization and nursing home care, or leave of absence. In the tragic even of loss of life, BalanceShield will cancel your outstanding account balance.” All of those benefits should intriguing but the offer does not provide the key information about what specifically the program excludes. instead the offer letter says “There are eligibility requirements, conditions and exclusions that could prevent you from receiving protection under the BalanceShield Debt Cancellation Program Agreement.” That’s kind of an important issue that you need to know before you can make an informed decision if you should sign-up for the BalanceShield program.
The cost of the BalanceShield product is 85 cents per $100 of your month ending balance on your credit card statement.
Application – Front
The actual paper application is very basic. but the fine print on it is ridiculous. I’ve scanned the fine print with a penny so you can see the relationship in size.
The fine print says they can change the terms from time to time, they will pull a credit report on applicants, they can pull a credit report for collection purposes, and if you give them a telephone number for a cellular phone or wireless device you give them permission to call you and send text messages on your cell phone. If your carrier charges you for text messages and calls, you have to pay for them.
The fine print also includes an overlimit transaction opt-in box to check. The fine print says if they allow you to go over your limit you will be charged a $39 fee. But even if you opt-in to the overlimit program the fine print says they can still decline any transaction that would cause you to go over your limit.
You can see on the front of the application the enrollment for the BalanceShield program is already checked and waiting for the applicants signature. Interesting how the print for that is larger than the other terms on this page. Also, there is still no additional information provided on what the program conditions are.
Application – Back
I did notice that the back of the application says the minimum credit limit is $1,000 and the minimum income to qualify is $12,000.