Watch Out For Credit Card Scams

Ads like this may appeal to you if you have a poor credit history or no credit at all. Beware: while secured credit cards can be an effective way to build or re-establish your credit history, some marketers of secured cards make deceptive advertising claims to entice you to respond to their ads.

If you have been victimized by one of these credit card scams you can file a complaint with the FTC…

Secured and unsecured cards can be used to pay for goods and services. However, a secured card requires you to open and maintain a savings account as security for your line of credit; an unsecured card does not. The required savings deposit for a secured card may range from a few hundred to several thousand dollars. Your credit line is a percentage of your deposit, typically 50 to 100 percent. Usually, a bank will pay interest on your deposit. In addition, you also may have to pay application and processing fees — sometimes totaling hundreds of dollars. Before you apply, be sure to ask what the total fees are and whether they will be refunded if you’re denied a card. Typically, a secured card requires an annual fee and has a higher interest rate than an unsecured card.

The Federal Trade Commission (FTC) has taken action against companies that deceptively advertise major credit cards through television, newspapers and postcards. The ads may offer unsecured credit cards, secured credit cards or not specify a card type. The ads usually lead you to believe you can get a card simply by calling the number listed. Sometimes the number is not toll-free. A ’900′ number service, for which you are billed just for making the call, may instruct you to give your name, address and other personal information to receive a credit application or simply give you a list of banks offering secured cards. It also may tell you to call another ’900′ number — at an additional charge — for more information.

Deceptive ads often leave out important information:

To avoid being victimized, look for the following warning signs:

If you’re considering a secured card as a way to build or re-establish a credit record, make sure the issuer reports to a credit bureau. Your credit history is maintained by companies called credit bureaus; they collect information reported to them by banks, mortgage companies, department stores and other creditors. If your card issuer doesn’t report to a bureau, the card won’t help you build your credit history.

If you have been victimized by one of these credit card scams you can file a complaint with the FTC by contacting the Consumer Response Center by phone: toll free 877-FTC-HELP (382-4357); by mail: Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580; or through the Internet, using the online complaint form at the Federal Trade Commission website, Although the Commission cannot resolve individual problems for consumers, it can act against a company if it sees a pattern of possible law violations.

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