If you're looking for credit, be wary of some 'gold' or 'platinum' card offers
promising to get you credit cards or improve your credit rating.
While sounding like general-purpose credit cards, some 'gold' or 'platinum'
cards permit you to buy merchandise only from specialized catalogues. Marketers
of these credit cards often promise that by participating in their credit programs,
you will be able to get major credit cards (such as an unsecured Visa or MasterCard),
lines of credit from national specialty and department stores, better credit
reports, and other financial benefits.
Rarely, however, can you improve your credit rating or get major credit cards
by buying 'gold' or 'platinum' credit cards. Often the only major credit card
you might get is a secured credit card that requires a substantial security
deposit with a bank. In addition, many of these credit-card offerors do not
report to credit bureaus as they promise, and their cards seldom help secure
lines of credit with other creditors.
Such 'gold' and 'platinum' credit-card offers usually are promoted through
television or newspaper advertisements, direct mail, or telephone solicitations
using automatic dialing machines and recorded messages. People who live in lower-income
areas often are the target of these sales pitches.
Be wary of 'gold' and 'platinum' card promotions that:
Some 'gold' or 'platinum' card promoters charge $50 or more for their cards.
Only after you agree to pay this fee are you told there's an additional fee,
sometimes $30 or more, to get the merchandise catalogues. Yet, these catalogues
are the only places you can use the cards.
Ads for ' gold' and 'platinum' cards may urge you to call numbers with '900'
or '976' exchanges for more information. You pay for phone calls with these
prefixes -- even if you never get the 'gold' or 'platinum' card. The cost for
these calls can be high.
You're not allowed to charge the total amount when you buy merchandise from
'gold' or 'platinum' card catalogues. Instead, you often must pay a cash deposit
on each item you charge -- an amount usually equal to what the company paid
for the product. Only after you pay your deposit can you charge the balance.
Also, catalogue prices can be much higher than discount store prices.
Marketers of 'gold' and 'platinum' cards often claim its easy to get major credit
cards after using their cards for a few months. In fact, the only major cards
you usually can get through these marketers are secured. A secured card requires
you to open and maintain a savings account as security for your line of credit.
The required deposit may range from a few hundred to several thousand dollars.
Your credit line is a percentage of the deposit, typically 50 to 100 percent.
Follow these precautions to avoid becoming a victim of 'gold' and 'platinum'
card scams:
Be skeptical of promises to erase bad credit or to secure major credit cards
regardless of your past credit problems. There are no "easy" solutions
to a poor credit rating that's based on accurate information. Only time and
good credit habits will restore your credit worthiness.
Contact your local Better Business Bureau, consumer protection agency, or state
Attorney General's office to see if any complaints have been filed against a
particular promoter of 'gold' or 'platinum' cards.
If a marketer assures you that reliable information about you will be reported
to credit bureaus, call the bureaus to confirm that the merchant is a member.
Unless 'gold' or 'platinum' card merchants are subscribers to credit bureaus,
they won't be able to report information about your credit experience.
Calls to numbers with '900' or '976' prefixes cost money. Don't confuse these
exchanges with toll-free '800' numbers. If you dial a pay-per-call number mistakenly,
contact your local phone company immediately. They may be able to remove the
charge from your bill.
The FTC works for the consumer to prevent fraudulent, deceptive and unfair business
practices in the marketplace and to provide information to help consumers spot,
stop and avoid them. To file a complaint
or to get free information on
consumer issues, visit www.ftc.gov or call
toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters
Internet, telemarketing, identity theft and other fraud-related complaints into
Consumer Sentinel, a secure, online database available to hundreds of civil
and criminal law enforcement agencies in the U.S. and abroad.