|Secured Credit Card Marketing
|ANYONE CAN QUALIFY FOR
A MAJOR CREDIT CARD!|
BAD CREDIT? NO CREDIT? NO
* Make the call NOW and get the credit
* Even if you've
been turned down before,
you owe it to yourself and your
* Your major credit
card is waiting.
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.
Secured vs. Unsecured
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.
Deceptive Ads and
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 and address to receive a credit application, or 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.
- The cost of the '900' call -- which can range from $2 to $50 or
- The required security deposit, application, and processing
- Eligibility requirements like income or age;
An annual fee or the fact that the secured card has a higher than
average interest rate on any balance.
How to Avoid the
To avoid being victimized, look for the following
- Offers of easy credit. No one can guarantee to get you credit.
Before deciding whether to give you a credit card, legitimate credit
providers examine your credit report.
- A call to a '900' number for a credit card. You pay for calls with a
'900' prefix -- and you may never receive a credit card.
- Credit cards offered by "credit repair" companies or "credit
clinics." These businesses also may offer to clean-up your credit
history for a fee. However, you can correct genuine mistakes or outdated
information yourself by contacting credit bureaus directly. Remember
that only time and good credit habits will restore your credit
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 a credit history.
For More Information
- To build a credit record, you may want to apply for a charge card or
a small loan at a local store or lending institution. Ask if the
creditor reports transactions to a credit bureau. If they do -- and if
you pay back your debts regularly -- you will build a good credit
If you cannot get credit on your own, you can ask a relative or friend
with a good credit history to act as your cosigner. The cosigner promises
to repay the debt if you don't.
- If you're interested in applying for a secured credit card, the
BankCard Holders of America (BHA) provides a list of institutions
offering secured cards. Send a check or money order for $4.00 to:
"Secured Credit Card List"
BHA Customer Service
524 Branch Drive
Salem, VA 24153
- If you're having problems paying bills, you may want to contact a
credit counseling service. Non-profit organizations in every state
counsel consumers who are in debt. Counselors try to arrange a repayment
plan that is acceptable to you and your creditors. They also can help
you set up a realistic budget. These counseling services are offered at
little or no cost to consumers. You can find the office nearest you by
checking the White Pages of your telephone directory.
Sometimes, non-profit counseling programs are operated by universities,
military bases, credit unions, and housing authorities. They are likely to
charge little or nothing for their services. Or you can check with your
local bank or consumer protection office to see if it has a list of
reputable low-cost financial counseling services.