Don't Wait! Apply Today! - (for fastest processing call 1-800-581-4501)

Don't Wait! Apply Today!
(for fastest processing call 1-800-581-4501)
by Mike Madias, Clinical Sociologist and Columnist

November 27, 2002

Columnist Mike Madias As a free lance newspaperman, I do not have a lot of money to waste. Imperative to my financial survival is a good relationship with an honest banker. And I have such a relationship. I have been trained on Wall Street with techniques of financial self defense (and some of financial suicide). It takes every trick I know to keep my head above water while my annual income bobs around the poverty level sometimes above, sometimes below. I get all kinds of offers in the mail; everything from teddy bears to solicitations for the munitions-of-the-month club. But, there is a time when a mailing piece, such as a business solicitation from a bank loan department, contains so much misrepresentation; that it approaches the level of mail fraud. And as the war weary nation approaches Christmas, greedy predators from the unscrupulous portion of the banking industry come out, and consumers get robbed. Usually, low income households are targeted, families at or below the poverty line.

For a long time, I have been critical of the Capital One Bank Corporation; which claims to have the lowest interest rates in the credit card industry. When one examines their fee structure, and figures that in, Capital One has some of the highest total carrying charges in the industry. But I have found a bank that is so loaded with fees, that it makes Capital One look like Santa Claus; it is the First Premier Bank's offer for a Gold Master Card. This is the worst credit scam I have ever seen. And I did not even have to look for it. It came looking for me. I won't say that I live in one of the most financially challenged neighborhoods in the entire United States, the U.S. Census Bureau has already said it. Me and my neighbors were in a financial bind, because the check cashing place on the corner closed down. The entrepreneurs who wanted to open a new dollar store gave up, perhaps because as the month progresses, fewer of my neighbors have dollars.

But, Mr. (or Ms.) D. Nicholsan, senior credit manager of First Premier Bank (FPB), from his office in a Sioux Falls, South Dakota post office box, approved me and all of my neighbors for a gold Master Card. How convenient; just as we are entering the holiday shopping season. Here is what the letter from Nicholsan, the senior credit officer of the FPB, said: "Time is running short. To take full advantage of this offer for an UNSECURED First Premier Bank Gold MasterCard, we must receive your request before December 18, 2002. You are PRE-APPROVED* for your very own Gold MasterCard with a 9.9% fixed APR on purchases. SEE REVERSE FOR INFORMATION ABOUT ACCOUNT RATES, FEES, COSTS, LIMITATIONS, AVAILABLE CREDIT AND OTHER TERMS." It seems as though this bank is offering an un-collateralized line of credit, a Gold MasterCard, with a carrying cost of under ten percent per year.

But, in this first paragraph, Mr. (or Ms.) D. Nicholsan misrepresents his or her company's offer. The offer is for a gold card with an initial minimum credit limit of $250; and perhaps more, but the minimum was all that the bank offers. Nicholsan says that his offer is for an unsecured credit card; that there is no required bank deposit to act as a surety for credit extended. But FPB requires certain "fees for the issuance or availability of credit"-a one time account set up fee of $29; and a one time program fee of $95; a recurring annual fee of $48; and an additional recurring annual participation fee of $72 ; or a total of $224.00. This sum is automatically charged to the account as a cash advance (at nearly 24%) when the account is opened. So the person who accepts this offer from the FPB instantly incurs a debt of $224 at a rate of 24% starting at the very moment the account is activated by the telemarketer. In return, the mark gets a plastic card embossed with his name and net credit line of $26 (that can be used for purchases at about 10% per year). Looking at carrying cost, the card older has paid $224 dollars up front for the ability to borrow $26 at about 10% per year, and after the first year, and every year thereafter he pays $120 for the privilege of continuing to hold his First Premier Bank Gold MasterCard. Says Mr. (or Ms.) Nicholsan, "Don't Wait! Apply Today! For fastest processing call 1- 800-581-4501 . . . As a Gold Card customer you will enjoy premium benefits." Yes, there is a sucker for FPB born every minute.

It seems to me, that it should not be necessary for a person living near or below the poverty line (including the old, the unemployed and the men and women of our armed forces) to need an MBA in order to manage their finances and see that someone is trying to hose them. And a bank (even one whose address is a humble post office box in Sioux Falls, South Dakota) should not have to prey on free lance newspaper men, their families, and their neighbors, in order to make an obscene profit. When a business solicitation from a bank, like FPB, contains so much misrepresentation as this one does, it approaches the level of mail fraud. And as the war weary nation approaches Christmas, greedy predators like Mr. (or Ms.) Nicholsan from the unscrupulous portion of the banking industry (in this case the First Premier Bank) come out, and consumers like the folks in my neighborhood get robbed. ***

Shalom,

Mike

And goodnight Jesse James, wherever you are.

Photo of Mike Madias courtesy of the author

A clinical sociologist living in the Metropolitan Detroit area, Mike's work has appeared in The Detroit News. He may be reached by e-mail at DetroitHardball@aol.com.