Applied Bank: Tricks and Traps for Unwary Cardholders

Of the four Applied Bank credit cards, two are for businesses, two are for personal use, and none are worthwhile. Each one has its own quirks that can end up costing unwary consumers a lot of money. The two personal cards, both secured, highlight different benefits: one has no interest, and the other has no annual fees. Yet the aspect that the card fails to mention is the one that comes back to haunt cardholders. Beware the Applied Bank credit cards.

No lawsuits, no problems (for Applied Bank)

All four of the credit cards have a clause quietly inserted into the cardholder agreement: unless you opt out with a written notice, you waive your right to sue the bank in a class action lawsuit. The best you can do is an out-of-court settlement, unless you “promptly” send the bank a letter saying that you want to keep your right to enter into a class action suit.

In case you’re wondering, yes, it is legal for a company to ask (and even require) you to waive that right. In April of this year, the Supreme Court ruled in a 5-4 decision that the Federal Arbitration Act, a law that’s close to celebrating its 90^th birthday, allows companies to require customers to give up their right to a class action suit. The Court struck down a California law that considered such clauses “unconscionable and unenforceable” and therefore invalid.

Now, to be fair, a number of banks have such clauses. American Express, Citibank and Discover have all had their day in the California courts when cardholders alleged that their arbitration clauses were “unconscionable” (the AmEx suit was brought by merchants). It’s yet another reminder to read the card disclosures carefully.

Secured Visa Gold: Bye-bye grace period

The first personal card, the Secured Visa Gold, advertises a low 9.99% APR that doesn’t rise if you miss a payment. What isn’t advertised in gaudy red letters is that the bank starts charging interest on the day of your purchase, rather than giving the usual 25+ day grace period. This means that you’ll accrue interest before you even get your credit card statement. Plus, if you pay for any optional card benefits, the cost of those benefits will lower your initial credit limit.

Platinum Zero Secured: High monthly fee. And we mean high.

While the Gold boasts that it has no annual fee, the Platinum tells you it charges no interest whatsoever. This may sound like a good deal – it’s not. You’re charged a $9.95 monthly maintenance fee that adds up to nearly $120. What’s more, the first month’s charge is assessed against your initial credit limit, so if you start off with a $500 limit you’ll only get $490.

Small Business Micro Loan: High fees, low limit

In addition to accruing 23.99% interest on purchases the day that you make them, the Applied Bank business credit card charges $9.95 in monthly fees and a one-time $125 setup fee. Those fees are assessed against your initial credit limit, lowering it by $135. You’re also charged $30 for each additional card, while most issuers will give you employee cards for free. The fees add up to $245 in the first year and $120 every following year, hardly worth the $750 or less line of credit.

The nice secured credit cards

Thankfully, there are alternatives to the gotcha ways of Applied Bank. Our favorite is the Orchard Bank card, which has a $35 annual fee that it waives for the first year. Its APR is a low 7.9%, and unlike Applied, it actually gives the standard 25+ day grace period. The unsecured Orchard Bank MasterCard is just about the easiest regular credit card to qualify for, and people with credit scores as low as 500-600 have qualified.
Alternatively, the Capital One Secured has a lower annual fee than Orchard ($29) but a higher APR of 22.9%. Its minimum security deposit is also more reasonable: $49-$200, rather than Applied Bank's $200+.
Secured credit cards are a great way to build up your credit score, and just about anyone can qualify (Orchard Bank doesn’t even peek at your credit score: barring something unusual, if you can pay the security deposit, you’ll be approved). However, just because secured cards often come with higher fees doesn’t mean you have to put up with tricks and sign away your rights.

Household Bank Rewards MasterCards
	Earn points redeemable for 2% Cash Back for every dollar spent with this card 0% Introductory APR on Purchases for 9 months and a Variable 19.90% APR thereafter 24/7 Online Account access for easy and self-management of your account The ability to set up email and text messages notifying you of your account status Free online bill pay
Annual Fee Signing Promo APR, variable* Intro APR Promotions $0 or $39* None APR: 19.90% Default APR: 29.49% Cash Adv: 20.90% Purchase: 0% for 9 mos Bal Trans: None