Read the fine print - get a magnifying lens, but read the fine print
Written: Jan 09 '05
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Pros: Haven't seen any
Cons: High interest, lots of fees and uninformed customer reps.
The Bottom Line: Household Bank - not in my Household.
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| germank106's Full Review: Household Bank Credit Card |
Yes, this card has been reviewed by lots of people, but I want everyone to know that even in 2005 nothing has changed with Household Bank. Well maybe except for the fact that they have become even ruder and a little bit less intelligent (yes, that is possible).
We receive about three to four credit card offers in the mail each week. Some of them we toss right away, but some we open and then go over the disclosure statement.
We are also currently teaching our 13-year old how to use credit responsibly and deal with money. After reading the Disclosure statement for the Household Bank Mastercard I found it to be an excellent learning tool.
I will not be so cruel as to copy the entire Disclosure statement, but I want to tell you how it reads in part and why I have decided not to apply for the card.
The statement itself contains 12 pages in very small print. Interestingly it is folded backwards, so all you see at first are the great interest rates.
This particular card offers a 14.9% interest rate for purchases, 20.9% for Cash advances and 22.9% variable default rate. You did notice that it said "variable" for the default rate. Here's how that works. If you are over your credit limit or if you are late with a payment, the interest rate automatically changes from 14.9% to the default rate. Except the default rate is not really 22.9%. It's the highest prime rate for the prior month plus the default rate and the Index rate. So let's see where that will leave us. Let's say prime rate is 2%, default rate is 22.9% and Index rate for Purchases is 18.5%. Add that up and you end up with .....43.4%. That's almost half of your debt amount in interest alone. Of course only the regular rate is printed in big fat letter, the rest is all fine print.
The grace period for payment is 25 days from the date of the periodic statement. Notice it does not say monthly statement, but periodic. So if they sent you one every other month or every three month, you are just out of luck. And it also says from the date of the statement not the date you receive it. So if it takes a week to get the thing to you, you only have 18 days left to pay your bill.
The annual fee is $59.00 and will automatically appear on your statement. The first month you have the card you will have your line of credit minus the annual fee.
There are countless other fees, some small, some larger,some for over the limit and late payment fees, but the one that absolutely got me was for an increase of your line of credit. If, after reviewing your credit, Household Bank decides to increase your line of credit (or if you ask for an increase) they can (and will) charge up to 50% (yes, that's FIFTY PERCENT) of your increase. If you get a $200 increase they can (and will) charge you up to ONE HUNDRED DOLLARS, just so you get to spend more of their money. Is that nice or what???????
I then found the information about Cash advances. Now I had always thought that a cash advance is the money I get from either a bank or an ATM machine or another financial institution when I use my credit card. Not so for Household Bank. According to the disclosure statement this also includes "cash-like transactions, such as purchasing a money order, travelers checks, casino or betting chips or a lottery ticket." Determined by Household Bank.
If I pump gas and then get a scratch of ticket for a buck and charge all to my card that means they can (and probably will) charge me another 5% for the ticket. Wow - never heard that before.
The disclosure statement got better and better. Of course my credit line and available cash advance may change from time to time. Household Bank will be nice enough to let me know when that happens. But of course that will depend on the periodic reviews they can do of my credit rating. And should I be late with a payment to another creditor they can then increase my interest rate, lower my card limit or cancel my card all together.
And if I am too close to my limit they can (and probably will) also assess an additional fee. Not because I am at my limit, but because I am close too it.
As I said, I used this disclosure as a learning tool for my teenager. By the time we got done reading and understanding it, he looked somewhat slackjawed, as did I.
I then called the number on the letter they send with the agreement and ended up at...ORCHARD BANK. Now according to the agreement Orchard Bank has absolutely nothing to do with Household finance. I was then informed (after spending almost 5 minutes on hold) by a customer representative that Orchard Bank is an issuer of Household Finance Mastercards. I then asked him if he could explain a few things to me. I purposely did not tell him that I had a copy of their disclosure statement. I asked about current interest rates and was told they vary depending on a person's credit rating and FICO score. My question about if there is an annual fee and if it could possibly be waived if the card was always paid off in full or if they would lower the interest rate if the card was used responsibly was answered with "I don't think we can do that, but if we review your credit rating after six months we can give you an increase in your line of credit". Of course lowering the interest would not make money for Household Bank, so I kind of expected that answer.
The customer representative then tried to talk me into applying immediately over the phone. I told him how I could do that without him giving me information about current rates . He told me I would get a copy of the disclosure statement with my credit card should I be approved. He was not willing (or able) to send me a disclosure statement without me applying for the card.
He also could not tell me whether "periodic statements" meant monthly or what time frame they had in mind and what day the statements were generated.
After not getting any information from this representative at all and after reading the disclosure statement I decided not to get a Household Bank Mastercard.
As a teaching/learning tool it's absolutely priceless. I have threatened to disown my child if he ever comes home with a card from this issuer.
I think it's no coincidence that Household Bank is the same Bank that issues "Refund Anticipation Loans" for HR BLOCH. They do charge several hundred percent interest for that service.
Recommended:
No
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Epinions.com ID:
germank106
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Location: middle of nowhere, MO
Reviews written: 230
Trusted by: 39 members
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Always open to a challenge, or a good write-off.
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