0% APR & Guaranteed Approval: Net 1st National Bank MasterCard... Is it a Scam?
Written: Jun 16 '01 (Updated Jun 16 '01)
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Pros: None, zilch, zero.
Cons: Instant debt, excessive fees, questionable practices.
The Bottom Line: If something sounds too good to be true, it usually is. The Net 1st MasterCard is a great example. Stay clear.
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| netKat's Full Review: Net 1st National Bank Credit Card |
You've probably run across pop up ads, or email spam, for Net 1st National Bank MasterCard. They're the ones that shout:
No Credit Check!
No Turndowns!
0% APR for the Life of the Card!
No Employment Verification!
As long as you're 18 years old or over and have a checking account, you will be approved!
Guaranteed!
Wow! Sounds too good to be true, doesn't it? Read on...
- Some Background -
Net 1st National Bank utilizes Key Financial Systems to manage their MasterCard. KFS specializes in sub-prime cards and they are the ones who actually provide the services on this MasterCard. And from what I understand from cardholders, these "services" are negligible.
Net 1st actually had KFS suspend marketing of this credit card for a time in 2000 because of an ongoing investigation by the OCC (Office of the Comptroller of the Currency, the government's czar of credit cards) on whether or not this program conformed to all federal and state laws. Called a "pay as you go" program, it passed muster, and once again is being marketed.
- The Terms -
• The APR on this card is 0% for the life of the card. There is no grace period, but since the APR is 0%, that really doesn't matter. This 0% is not a promo rate, it's the regular rate.
• The minimum monthly payment is $15 or 3% of your balance, whichever is greater.
• Late Payment and Overlimit fees are $25.
• There is a transaction fee for cash advances in the amount of 3% of the cash advance. The APR on cash advances is also 0%.
• There is an Annual Fee of $96, payable in monthly installments of $8.
• There is an initial application processing fee of $99, or $119 on a joint account. This is a nonrefundable one-time fee when applying for the card. Beware... this fee will be electronically withdrawn from your checking account upon your application.
• There is a $500 "Reservation Fee" in order to open an account. This fee will be immediately billed to your new Net 1st National Bank MasterCard.
- How can they Approve Everyone and charge 0% APR? -
As you can see, when you obtain the Net 1st National Bank MasterCard, you are simply paying them for the privilege of borrowing back your own money. This is known as "pay as you go". Your credit line will only amount to the total you have managed to pay off on the card.
Here's an example:
I open an account and my first statement shows a minimum payment of $23
$15 (3% of $500 balance)
$8 monthly fee
If I make the minimum payment of $23, I will have $15 of available credit on my card.
In other words, I will earn the right to borrow back my own money.
Let's extrapolate what this account can look like in the future. One day, I will have paid off my whole "debt" and have access to a $500 credit line. Remember, that $500 is my own money that KFS is holding interest free. Now, I am paying $96 a year to have $500 available credit. That's about a 19% APR that I am paying the bank for using my own money, which they are holding interest free! "0% APR" doesn't look so hot anymore, does it?
This is a great deal... for the bank! No risk and a guaranteed return on someone else's money! Cha-ching.
- Why would anyone get this card? -
It is very frustrating to try to reestablish tarnished credit. Many people are attracted to this "pay as you go" program to establish a good credit record. Net 1st National Bank assures their cardholders that they report to all three credit bureaus and they guarantee approval so long as you are 18 or over and have a checking account.
Many applicants will not read the terms and conditions and be unaware that they are going to be charged $500 immediately and have to pay that back in order to begin utilizing the credit card. Online, the terms and conditions are accessed by a small hyperlink.
Additionally, applicants may be unaware that the $99 application fee will be instantly sucked out of their checking accounts upon submitting their application. There have been many complaints of overdrawn accounts and resulting bank fees due to this practice.
- In Conclusion -
Is the Net 1st National Bank MasterCard a scam? Very close, but no cigar in my book because all the terms and conditions are clearly laid out and available to read... IF you look for them. But it's a very, very bad deal for consumers.
The most important lesson to learn from the Net 1st National Bank MasterCard is to read the terms and conditions thoroughly before you apply for any credit card.
Net 1st, you should be ashamed. :(
Consumers, if you are looking for a way to reestablish good credit, go for a real credit card with a more ethical institution.
You may be interested in these other related reviews:
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• Aspire to go Broke: a Visa credit card at 41.5% APR!
http://creditexpert.epinions.com/finc-review-D0C-50D2E1C-39D3D5FE-prod1
• The Absolute Worst Credit Card Company in Existence!
http://creditexpert.epinions.com/finc-review-40F3-827C7A6-395E59C1-prod4
• YES, You CAN Repair your Credit: an Industry Insider Shows You How
http://creditexpert.epinions.com/finc-review-23B7-83662BE-38F10F1B-prod6
Recommended:
No
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Epinions.com ID:
netKat
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 - Top 200 |
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Member: Kat
Location: Maryland
Reviews written: 166
Trusted by: 885 members
About Me:
Analytically inclined mom, bank officer, freelance writer, and internet addict.
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