Credit Card Scams
These types of credit card offers for those folks with less than stellar credit often contain over inflated fees, out-of-this world interest rates, and terms that are simply insane! The fact is many credit card companies prey on those who have bad credit. It makes it difficult for those who may be trying their best to re-establish their credit.
What should you be on the lookout for? How do you know if you’re being scammed? Here are some things you should look for.
Have you ever received one of those letters telling you that you’re pre-approved for a $3,000 line of credit with Visa or MasterCard? But, when you begin reading the rest of the details you discover that it’s really a pre-approved limit to use on their store membership site.
It sounds so good, you’re actually pre-approved and that’s a great feeling. All you have to do next is send back the signed form and you’re all set. So, you read down some more and see that you must also pay an annual membership fee of $399.00 upon activation. If you’re really lucky, the company will also charge you an activation fee of $200 to go along with it. Suddenly, that nice feeling you had just turned into nausea.
Next, you do some more reading and checking only to discover that the merchandise you’re eligible to buy is either overpriced, or junk. Most of the time it’s both!
That is just one example. Here is another common credit card offer for those with less than perfect credit. The envelope says you’re pre-approved for a new Visa card and there is no security deposit. It’s a genuine Visa card, not a membership club or anything like that. Hey, were onto something now. So far, so good.
The offer continues and informs you that your credit limit will be $250. Nothing to get real excited about, but it’s a good start. That is until you come to the fees. You will have an account set up fee of $29.00, and then there is a program fee of $95.00. Next, you have an annual fee of $48.00. Then the company throws on a participation fee of $72.00 annually, but they only charge you $6.00 monthly for this one. All told, your opening balance is $178.00! You have an available credit line of a whopping $72.00. Finally, you get to the part where it tells you the interest rate your new account will be charged. It’s an astronomical 28.9%! (Actually I have seen some that had even higher rates)
When you get offers like this in the mail, throw them out. Don’t even consider opening an account with a credit card company like this. You would be better with opening up a new Visa or MasterCard with a reputable credit card company that will ask for a security deposit. I realize for many people that coming up with $250 to open up a secured account is difficult. But, let’s face the facts. If you don’t have at least $250 to start building your future credit with, then you don’t need a credit card. It will only get you back in the same situation you want to get out of.
A secured credit card will offer a lower rate of interest, fewer and less expensive fees, and it will help re-build your credit by reporting your monthly activity to all major credit bureaus. Before long you’ll qualify for a higher credit level without having to send in more money in advance.
