Secured Credit Cards are used by people with little or impaired credit history to start building a credit history. While these cards are useful for getting on the right track, there are a lot of secured credit card scams going around, which means that you need to be careful, when applying for a secured credit card.
TDL wrote about a new site called Money Matters yesterday, which has got some useful tips about topics related to personal finance, and I found one very easy and useful tip to recognize fraudulent offers for secured credit cards on the site.
You should be wary of a credit card offer that needs to you to dial a 900 number. A 900 number bills you as soon as you call the number, and you are pretty much charged — just for making the call. The call alone could cost you between 2 and 50 dollars, and can cause a lot of damage if you divulge sensitive information like your SSN or credit card numbers.
As soon as you see a – 900 number to call, walk away.
Frauds Misrepresenting The Credit Usage
Then there are other type of frauds which are perpetrated by misrepresenting what you will get. For instance, you may get a mail offer for a credit card with a $2500 credit limit, regardless of your credit history. All you need to do is call the number and apply.
When you call the number — the sales rep will explain the details and say that you will get a major credit card with a credit limit of $2,500.Â All you have to do is pay a processing fee of $150.
After you pay the processing fee — you get a charge card and a catalog!
All you can do with this card is buy stuff from their catalog and no more.Â And you are told that your credit card application will be processed only after you spend $400 on the catalog!
Even if you do spend the $400 — you will just get an application to a bank credit card in the mail and this will be no more than what you could have done yourself.
I think most people lose money on this scam because once they spend the initial $150 — they think if they spend $400 more, at least they will get their money’s worth. Clearly, if you get something that you think is deceitful in the first go, then there is no point in spending more money on it.
There are many more scams out there and generally an offer to a credit card without a check on credit history should raise suspicion.