Gamestop credit scam

[Yunru]

Seen this recently. So its a good warning for those who are under a age of 17 and will be soon 18.
Well as soon as you hit 18 they will send you a credit card with 1000$.
You can use this card to buy anything from their store.
Now the suprise:
Their interest rate is 26.99%
So lets say you buy a game that is worth 60$ with this card and you dont pay off till next mounth.
Gamestop just made...wait for it....76$ more of you.....and if you delay even more it goes up and up and up.
And a lot of people dont have that much cash at that age.

Now think that some stupid kid buys 10 games there....thats 600$ and soon 760$. Can he pay them? HELL NO.

Article link:
http://uproxx.com/gammasquad/2014/07...xploit-gamers/

Some guys rant:


You know...i am kinda happy it doesnt exist in my country.

[Brangh]

Well as soon as you hit 18 they will send you a credit card with 1000$.
You can use this card to buy anything from their store.
Now the suprise:
Their interest rate is 26.99%
So lets say you buy a game that is worth 60$ with this card and you dont pay off till next mounth.
Gamestop just made...wait for it....76$ more of you.....and if you delay even more it goes up and up and up.
And a lot of people dont have that much cash at that age.

Math.
26.99% APR = ~2.25% 1 month period (if no grace period) ~ $1.35 for a total of $61.35 to pay off the balance after 1 month, not $72.
And the article only mentions pre-approval. The individual still has some responsibility for declining a card if they are incapable of using it responsibly.
And no kid will be walking around with this, legal adults will be.

Quick fact: Credit cards are not issued by stores and backed by banks for the purposes of helping people out in the time of need for a slight cost. They are in it for the profit. If the card has a high interest rate, it other reflects the cardholder's recent credit history or the demographic that card is targeted at. The RushCard is just as predatory without the interest rate angle, but nobody was crying out about that when it was first issued.

[Deleted]

Threads like this worry me as the OPs facts are quite wrong.

As the poster above said an APR of 26.99% won't result in that much being added every month, its an annual rate.

Also for the credit card to be activated I assume the person receiving it would have to sign a credit agreement (you would in the UK so assume US is similar), so it is consensual.

Where is the scam exactly?

[Arkenaw]

I don't see how this is a problem. Don't use it? Throw away the mail offer? Maybe it's just cause I was raised properly and knew that credit cards weren't magical sources of unlimited money with no strings attached by the time I was 18.

[Yunru]

I don't see how this is a problem. Don't use it? Throw away the mail offer? Maybe it's just cause I was raised properly and knew that credit cards weren't magical sources of unlimited money with no strings attached by the time I was 18.

A normal credit card here allows you to take out 200 euros. (only 200 no more)
So they are magical for stupid.

Oh yeah..i added one zero too much:
$18.36 a year for 60$ game (if you need to pay a mounth)

Now to make things interesting:
Fresh 18 year woman enters a gamestop and buys herself a xbow for 300$ and 5x65$ games.
In total 625$. She stil has 375$ left on a card.
She forgets to pay for a year.
Now lets add some tax and inflation Rate.

And we get this:
End Balance $805.49
After Inflation Adjustment $782.03
Total Principal $625.00
Total Interest $189.99
Total Tax $9.50
* interest rate of 26.99% compound monthly is equivalent to annual rate of 30.592%

Yup...a lot of money.

[Blueobelisk]

You make it sound like its a $1,000 gift card. They make a distinction that it's a credit card, right?

Also, how do you forget to pay for a year? Aren't there at least minimum monthly payments since they mail you every month?

[Vespian]

A thread already exists. Although I must say I favor one without that video with the mentally challenged Slayer fanboy going all emo about it, so maybe we should make this the megathread.

[roflwaffle]

She forgets to pay for a year.

lol what

neededafewmoreletters

[Orange Joe]

A normal credit card here allows you to take out 200 euros. (only 200 no more)
So they are magical for stupid.

Oh yeah..i added one zero too much:
$18.36 a year for 60$ game (if you need to pay a mounth)

Now to make things interesting:
Fresh 18 year woman enters a gamestop and buys herself a xbow for 300$ and 5x65$ games.
In total 625$. She stil has 375$ left on a card.
She forgets to pay for a year.
Now lets add some tax and inflation Rate.

And we get this:
End Balance $805.49
After Inflation Adjustment $782.03
Total Principal $625.00
Total Interest $189.99
Total Tax $9.50
* interest rate of 26.99% compound monthly is equivalent to annual rate of 30.592%

Yup...a lot of money.

I highlighted that only issue I see in your post.

[KOMO1211]

so they are doing just about what every bank in the country does once you hit 18. 18 years old with no credit you can get a CC for 1k just about anywhere because they know they are going to get way more than 1k back on the deal eventually, most of the time anyway. oh ya we will give you all the credit cards you want. because they know 18 year old kids are stupid and irresponsible and don’t know shit about how CC's work, and its real easy to rack up that bill.

[Yunru]

I highlighted that only issue I see in your post.

Its example. Could also say Ignores, has no money, moves out of country, other stuff.

[Shuya82]

This isn't a scam, this is just how credit cards work. This interest rate is a bit high, but it isn't unheard of.

[Waaldo]

How is this a scam?
Usually interest rates depend on your current credit, so 26.99% would be the highest it would go with horrible credit. That is no different than any other credit card, especially a third party one. This may blow your mind, but if you don't spend what you don't have then you get a 0% APR.

[Deleted]

Pre-approval means they send you a letter saying you're guaranteed to get credit, you still have terms and conditions to read and you post it back. I get a couple of these in the mail every year and throw them in the bin. It's hardly a scam. In the UK 26% APR is not that unusual for a low-credit required card. There is really nothing to see here. If you're a teenager, do not take out a credit card unless you know you can pay it back.

26% is also yearly. Not monthly, so your maths is way off.

[DeadmanWalking]

Op assumes if you are 18 you are still a child incapable of understanding how credit cards work. If you are 18 you can vote, you can go to war and kill or be killed, you are legally an adult. If this is a scam then every bank and credit card is a scam. It is no different than any other time in history since the 80's since credit cards existed. They always send out pre-approvals to 18 year olds because 18 year olds don't have shopping impulse control like 40 year olds do. Is this taking advantage of children? No. This is taking advantage of inexperienced adults, who need to learn to control their debt. A person can't roll though life ignorant or stupid.

There really isn't anything here in this thread of any value, OP can't even get the math right.

[tobiashunter]

Welcome to adulthood? This isn't a scam, this is a VERY typical "First Credit Card" APR, because a new 18 year old has no credit rating. Generally, I've seen/heard of them being between 17.99% and 29.99%. This is especially true for pre-approvals AND store cards (Sears, Macy's, Walmart, Target... all have really high interest rates). I'm so glad I have a credit rating now... I hated those days. Oh, and MOST credit cards you don't accrue interest on items added THAT month. So if your fictional person bought $800 worth of items, they generally have 30 days to pay off that $800 with no interest.

[Orange Joe]

Its example. Could also say Ignores, has no money, moves out of country, other stuff.

And it would still be their fault.

[JestersShadow]

Personally I think it's a good thing, if you don't know simple maths you should be weeded out from society. if used correctly these can be used to get you a better credit rating overtime.

Could be worse ... could be wonga with their 5000%~ APR

[Dundebuns]

A smart person would live within there means and wouldn't get a credit card. I'm 30, had a £500 limit card when I was doing my PhD for booking hotel rooms on conferences which has since expired due to inactivity, and only accrued my student loan as debt. It's really not hard to do!

[DiscoGhost]

its not a scam, its just a high interest credit card. by the time i was 18 i understood how these kinds of things work and this is just real life. usually if you get a high interest card like this, you dont keep a balance on it anyway...