Gold Card Update Puts Service Members in a Tough Position
Update: Some offers mentioned below are no longer available. View the current offers here.
About this time last year, I was approved for the Mastercard Gold Card, the top-of-the line option in the Luxury Card portfolio. At the time, the card offered a 50,000-point sign-up bonus — worth $1,000 in airfare — and it still offers a $200 annual airline fee credit. The card has a standard $995 annual fee, but since I'm a service member, Barclaycard not only waived the annual fee, but also offered a 0% APR for the duration of my active duty service.
This was an incredibly generous offer and became very popular among many of us in active duty. I put $5,000 of a new car (the maximum allowed by the dealer) on the card, and several friends put weddings and home improvement projects on their cards because it was, in essence, an interest-free loan. In May of last year, Barclaycard dropped the sign-up bonus on all three cards in the portfolio, and a few hairs began to stand up on my neck as a policy change seemed possible.
In late November of last year, word began to come through back channels that Luxury Card would announce a change to which Service Members Civil Relief Act (SCRA) benefits it would offer, with the biggest update being that the annual fee would no longer be waived. Many of us sent secure messages requesting clarification. Here is the standard response we received, sent from a TPG reader who reached out and echoed my own concerns:
We all breathed a sigh of relief, as it appeared that if we already had the card prior to November 28, we'd be grandfathered in and keep our original benefits. However, a couple of weeks ago, this letter dashed those hopes:
Luxury Card has changed its policy again, and this time service members are in a tough bind. If we're carrying a balance, we either have to pay the $995 annual fee, or pay off the balance in full and close the card to avoid the fee. This isn't a big deal for me personally, but sailors and Marines I work with cannot afford to pay off the balance and are now faced with a~ $1,000 annual fee because Luxury Card has reversed course.
We reached out to a spokesperson, who gave us the following statement:
"Unfortunately, one of our customer service agents provided inaccurate information to the customer regarding the benefits applicable to his account under our SCRA policy. We are contacting the customer directly to apologize for the confusion and address his situation. Please know that we will honor the annual fee waiver for the customer during his active duty service because of our error.
The benefits we offer active duty military under our SCRA policy fully comply with the requirements of the SCRA. For clarity, I thought it would be helpful to highlight some of the current benefits we provide to our customers who are eligible and qualify for the duration of their active duty status:
· 0% interest rate on balances
· All fees waived, including the annual fee
Please note that prospective applicants who are on active duty at the time they apply for a new credit card account are not eligible to receive SCRA benefits, which includes the waiver of the annual fee.
Customers and prospective applicants can always contact our SCRA assistance line at 866-918-5212 to discuss what benefits are available based on their status."
It seems Luxury Card is sticking to its policy, which makes active duty members either pay the hefty annual fee or pay the card off in full and close it. A few problems still remain:
- Many active duty people were told, like in the letter above, annual fees would not be charged until 2018. This at least gives us a year to pay off the balance or save up for the annual fee. My account, however, was just charged the annual fee on March 31.
- The statement above makes it sound like this was an isolated incident and it would work with the reader directly. That's not the case, as I know dozens of people who were told the originally given benefits would remain until the end of our active service.
On April 4, I received a third communication in the mail which reiterates that I'm on the hook for the annual fee, and unlike the reader above given until 2018, my fee has already been charged to my account.
To make it even more confusing, after receiving the third letter, I logged in to my account to see this on my transaction history:
I don't know if that is supposed to be a $995 refund and $9.95 was put in by mistake, which in turn would contradict the last two communications I've had.
From a communication standpoint, this is quite a mess. The reader who originally shared his concerns with TPG filed a Consumer Financial Protection Bureau (CFPB) complaint and has just received word that the original terms and conditions — i.e., no annual fee — will apply for the duration of his active duty service. I encourage all my fellow active duty members to follow the same course.
There's no doubt this was an overly generous offer in the beginning, and logically many service members took advantage of it. While we never recommend carrying balances on credit cards, if a well-known, established bank clearly states 0% APR in the terms and conditions, why wouldn't service members take advantage of it?
A grandfather clause, as originally stated last fall, would be a logical choice. I hope a solution is quickly instituted and clearly communicated.
Has this Luxury Card update affected you? Share your experience in the comments below.