Author Topic: The "Cash Yes" MasterCard(tm): Great idea for those who need to rebuild?  (Read 3348 times)

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Rottweiler

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Or, is it more like a "pay day loan" in plastic than one might suspect?

Well...the Terms and Conditions seem to say a lot.  Perhaps more than the issuer of the "Cash Yes" MasterCard wants to be said and not what they would want said, either.  Let's take a look at this "gem":

First of all, the applicant MUST have a checking account with a Federally-insured bank:

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To satisfy one condition of approval for the CashYes! Card, you must: (i) maintain an open and active checking account with an insured depository institution; and (ii) authorize us to receive your first Account payment by remotely created check (a paper draft we prepare and present to your depository institution for payment from your designated checking account). We may not approve your Account or extend credit if we are unable to verify this information using the bank routing and checking account number provided in your application. Additional conditions for approval also apply. See the payment authorization materials for more information about how to establish and cancel an Automatic Payment Plan. We will waive the $5.00 Payment Processing Fee for your first payment by remotely created check and for subsequent Account payments you make under an Automatic Payment Plan using preauthorized electronic fund transfers (ACH transactions).

This type of "insured" payment plan requirement is common with another type of sub-prime credit:  The "pay day loan"!

Of course, we cannot "forget" to include that binding arbitration clause, can we?

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ARBITRATION NOTICE:  The Cardholder Agreement you receive will contain an arbitration provision that substantially limits your rights in the event of a dispute, including your right to litigate in court or have a jury trial, your discovery and appeal rights, and the right to participate in court or in arbitration as a representative or member of a class action. You may obtain arbitration rules and forms through either or both of the following arbitration administrators:  American Arbitration Association, 800-778-7879, www.adr.org; and National Arbitration Forum, 800-474-2371, www.arb-forum.com. Before you use or allow someone else to use an Account, please review the Cardholder Agreement and its arbitration provision carefully, particularly its explanation of the time period in which you may opt-out of arbitration.

I would seriously doubt that this "Opt-Out" provision can be declined and the aspiring card holder actually be allowed to keep their account open.

Now, is the cost of the service worth the hassles? 

Maybe...let's start with the APR, which is not great at 19.9% (which goes UP to 22.75% APR for purchases;Cash Advance APR is  26.25% and the penalty APR for Purchases and Cash Advances is 29.95%) , but there has been worse in the sub-prime market.  Should it be that high, since they do require an automatic payment setup?  I should think not.

Now, did you really expect that there would be no such thing as a "fee"?  ;D  Here they are!

Advance fees (charged to the account even before one can even charge a stick of gum): 

One-Time Account Set Up Fee:  $125.00
One-Time Program Participation Fee:  $76.00
Annual Fee:  $96.00 per year
Monthly Participation Fee:  $96.00 per year, billed monthly at $8.00 per month

So about half of your initial $675 credit line is eaten up by fees!  Better than First Premier (tm), but...since they are virtually guaranteeing themselves payment by taking out at least the minimum payment automatically every billing cycle, why the excessive "up front" stuff?  Well, they have an explanation for that, too:

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Why are there fees to open the Cash Yes card account?

The Cash Yes credit card is designed for those individuals with a less than perfect credit history, those who had a previous bankruptcy or those who are seeking to build their credit. The fees help protect against potential losses that could result from cardholder defaults. If you have a good credit history, this card may not be for you.

"If you have a good credit history, this card may not be for you." That's an understatement!  I find this amazing, simply amazing:  Right up front they tell us that the fees are "front-loading" the card as protection from loss from cardholder defaults!  As if getting their "up-front" fees paid via. ACH and their "encouragement" to the cardholder to set up an auto draft to pay the bill each month were not "guarantee" enough...  ;P 

In short, their assumptions about the reliability of their customer base says a lot.  This is in spite of the fact that the "CashYes" people are SO good about making their customers pay off the balance faster:  The monthly minimum payment is 9% of the New Balance or $30 (or whatever the New Balance is), whichever is higher.

Is the "hurt" at an end, yet?  Hardly;here are some more fees to increase the "pain":

Foreign Currency Transaction Fee: 2% of amount in U.S. dollars after each Purchase and Cash Advance transaction has been converted from a foreign currency
Transaction Fee for Cash Advances:  Greater of $5.00 or 5% of Cash Advance amount
Late Payment Fee:  $25.00
Over Limit Fee:  $25.00

And...guess what?...the hurt continues for we have even.more.fees (emphasis mine):

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ADDITIONAL FEES: In addition to the fees referenced above, your Account may be subject to the following fees under terms explained in the Cardholder Agreement:  $40 Credit Limit Increase Fee for the first credit line increase, if you request and we agree to increase  your Credit Limit; $5.00 Payment Processing Fee, for each monthly Account payment not made by preauthorized electronic fund transfers under an Automatic Payment Plan; annual $20.00 Additional Card Fee, for each additional Card we issue to an Authorized User at your request; $5.00 monthly Account maintenance fee, for each month after you close an Account and maintain an outstanding Account balance of $20.00 or more; $30.00 Returned Payment Fee, for each payment not honored by your financial institution; $25.00 Fee for any express Card delivery you request; and $5.00 for duplicate copies of periodic statements and other credit documents.

Nice...they charge you for everything but the use of the kitchen sink (and would probably do that if they could but find a way to do it!).

Now, about those credit limit increases, something every card holder would want...yes they will automatically give you one if they decide you deserve one after six months of "good behavior"...and charge you $40 for it whether you want it or not (unless you turn it down in time if you don't).

Now, the important part, which is improving the credit rating, which is what people want.  Since the card holder is paying so much for the privilege of holding this fine financial "instrument", can they, at least, count on this bank actually reporting to the CRAs?  After all, it IS supposed to be a "rebuilder" card...but then again...

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NOTICE TO CARDHOLDERS: We may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report.

Note that critical word, "may".  Not "we will report", but rather "we may report".  Wanna' bet that the only time the "Big 3" ever hear about the card holder is if they "blow it" and become delinquent/default?  Uh, huh...

Another question is:  Just how big is that first required-by-ACH payment supposed to be?  Is it the minimum payment on that "fees, fees and more fees" bill?  Or the whole shebang, which is over $300 before one even sees the card?  I was unable to determine which situation it is from what's posted on the website, and it's important to know.  If it's the latter situation?  Considering that this card is intended for people with "slow", "bad", or "no" credit (a population not exactly known for keeping a lot of excess funds in their bank accounts, mostly because they probably don't have it after they pay the bills), the chances of immediate default are rather high.  That would, in turn, trigger all those "lovely" penalty fees!

The kicker for the "credit-impaired" who might want this card anyway?  It's NOT necessarily going to be issueable where you want to be:

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The CashYes! Card is issued by MetaBank, Sioux Falls, South Dakota, pursuant to license by MasterCard International Incorporated. The CashYes! Card is not offered or available to residents of Iowa, New York, West Virginia, Wisconsin, Puerto Rico or other U.S. territories; to non-U.S. residents; or to individuals under the age of 18 (age 19 in Alabama and Nebraska).

I wonder why?

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Note: This post was originally posted at "Debtor Talk": http://debtortalk.net/forums/index.php/topic,932 .
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Flyingifr

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"If you have a good credit history, this card may not be for you."

An understatement that I would change to

"If you have a pulse, this card may not be for you."
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

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