Recently, I needled American Express for sending out a less than candid direct mail solicitation — a 4.9% credit card offer that was really 8% if you read it carefully.
And in years past, I have had my share of complaints about the GM Mastercard — as have you. (It turns out GM does not actually handle this card itself, it just reaps the ill will.)
So now comes an “Important Amendment” to my GM Mastercard account (that can’t be good, I’m thinking), disguised as just the best darn news.
On the outside of the envelope is a photo of a beach chair and umbrella and the enticing headline:
Save money every day —
and claim your 2 Complimentary Round-Trip Airline Tickets.
Find out how inside.
A blessedly brief letter from Charles F. Ugolino begins, “Dear GM Cardmember: As you know, from time to time we do something special for our best GM Cardmembers — and right now is one of those times. Now you can claim two Complimentary Round-Trip Airline airline tickets just by trying RateSaver (servicemark) risk-free for 30 days.”
Yes, the next to last little paragraph — in bold, to answer critics like me — does say, “Also enclosed, please find an important amendment to your Account.” But the PS reminds you that you can save up to $180 a year with RateSaver (servicemark) — and claim two free airline tickets.
The enclosed brochure has big type, color, and more mention of the $180 and the free tickets.
Well, it seems that the $180 consists of a some kind of savings on your electric and phone bills — it does not say how, but appears to be the result of this great RateSaver (servicemark) program, which is free for 30 days but then automatically billed to your card — $69.95 each year unless you call to cancel. And you also get an Internet connection for just $9.95 (for the first two months, $19.95 thereafter). And you get $175 cash back on a home security system and monitoring (the footnote explains, in 6-point type, that you have to buy a security system and commit to $718 in monthly payments to qualify for that $175 rebate), and “as an EXTRA Bonus, you may also claim 2 Complimentary Round-Trip Airline Tickets to use on your next vacation.” Except that to get them you have to stay a certain minimum number of nights at certain participating hotels and resorts at their full room rates (and not during peak vacation times), though to find out the specifics of just how bad the deal really is you have to affix your address label and send in the card authorizing the 30-day risk-free RateSaver (servicemark) trial after which, if you don’t call to cancel, you’ll be billed $69.95 a year.
At which point I’m guessing many folks are so confused or annoyed they just throw the whole thing out. I went all the way from K through 12 without a hitch and yet, after reading this twice, have no real clue what they’re offering. Does RateSaver (servicemark) somehow lower any phone bill? Do I have to switch carriers? Does it shut off my air conditioner at peak times to get me a discount from the power company? Do I have to buy a security system to use RateSaver (servicemark)?
Other people are so confused but curious that they affix their address label to the detachable business reply card.
Either way, Household Bank (which issues the GM card), wins — because you see what’s happened? You’ve forgotten all about the Important Amendment to your account. This is on a separate slip of paper, small type, no color, legible but forbidding, and it basically says (though not quite this way, of course): “Due to our uncontrollable desire to gouge people any way we can, we’re raising the interest rate on your balances effective June 1 to an unconscionable 23.9% if you’re even a day or two late with a single payment or if you exceed your credit limit by even twelve cents (which we could easily prevent by declining the charges — but why? We’d much rather let the charge go through and ratchet your interest rate up to 23.9%).”
And there’s more good news! Want a cash advance? In addition to the modest 19.99% Household bank will charge you for this, a 3% “finance charge” will now immediately hit your account — minimum $15. So let’s say you’re tight for cash and you use your card to withdraw $300 and pay it all back in a month. That’s an immediate $15 (the minimum) — which works out to 5% — so you’re really getting to borrow $300 (or $285, depending on how you look at it) for 30 days at a cost of $15 plus $5 in interest — $20 in all. That works out to an annualized interest rate well over 70% a year. Granted, if you hang on to the $285 for a year, the effect of the $15 minimum is spread out. Now you’re paying more like 25% a year.
But the main thing, to go back to the beginning, is: “As you know, from time to time we do something special for our best GM Cardmembers — and right now is one of those times.”