ANYONE CAN QUALIFY FOR A MAJOR CREDIT CARD!
Separated? Divorced? Bankrupt? Widowed?
BAD CREDIT? NO CREDIT? NO PROBLEM!
Make the call NOW and get the credit you deserve! Even if you've
been turned down before, you owe it to yourself and your family.
Your major credit card is waiting.
If you have no credit or a poor credit history, this ad may appeal to
you. Before you respond, read this brochure. Using a secured credit
card can be an effective way to build or re-establish your credit
history. However, be aware that some marketers of secured credit
cards make deceptive advertising claims to get you to respond to
This brochure explains the differences between a secured and
unsecured credit card, describes how marketing scams are used to sell
secured credit cards, and tells how to recognize and avoid deceptive
credit card offers. Some organizations that offer additional consumer
credit information and assistance are listed at the end of this
Secured Versus Unsecured Cards
Secured and unsecured credit cards work the same way; both 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 savings account for a secured card may range from a few hundred
to several thousand dollars. Your credit line will be a percentage of
your deposit, typically from 50 to 100 percent. Usually, a bank will
pay interest on your deposit.
Also, you may have to pay application and processing fees that
sometimes amount to hundreds of dollars. Before you apply, be sure to
ask what the total fees are and if they will be refunded if you are
denied a card.
A secured credit card also typically requires an annual fee and has
higher interest rates than unsecured cards.
Deceptive Ads and Scams
The Federal Trade Commission (FTC) has taken action against companies
that deceptively advertise Visa and MasterCards through television,
newspapers, and postcards. The ads may offer unsecured credit cards,
secured credit cards, or not specify a type of card. The ads
typically are phrased to make you believe you can get a credit card
simply by calling a telephone number listed in the ad. Sometimes the
number is not toll-free. A "900" number service, for which you will
be billed just for making the call, may instruct you to give your
name and address to receive a credit application, or it may give you
a list of banks offering secured cards, or direct you to call another
"900" number at an additional charge to get more information.
Be aware that deceptive ads often leave out important information.
* They often omit the cost of the "900" telephone call, which can
range from $2 to $50, or more.
* The ads often do not mention a required security deposit, and
application and processing fees for the secured card.
* The ads frequently fail to say anything about income and age
* The ads may not mention the annual fee for the secured card and a
higher than average interest rate on any balance.
How to Avoid the Scam
To avoid being victimized by a secured credit card marketing scam,
look for the following signals.
* Beware of 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 history through a credit report.
* Think twice before making a call to a "900" telephone number for a
credit card. Remember: you pay for calls with a "900" prefix and may
never receive a credit card.
* Be wary of 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. But remember, only time and good credit will repair your
credit report if you have a poor credit history.
If you are considering a secured card as a means 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 that collect information reported to them by banks, mortgage
companies, department stores, and other creditors. If your card
issuer does not report to a credit bureau, the card will not help you
build a credit history.
For More Information and Assistance
* 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 you
pay back your debts regularly, you will build a good credit history.
If you cannot get credit on your own, you also can ask a relative or
friend with a good credit history to act as your co-signer. The
cosigner must promise to repay the debt if you do not.
* If you are interested in applying for a secured credit card, the
BankCard Holders of America (BHA) provides a list of institutions
offering secured cards. BHA's "Secured Card List" is free to BHA
members, $4.00 for non-members. Write to:
BankCard Holders of America
560 Herndon Parkway, Suite 120
Herndon, VA 22070.
* If you are having difficulty paying your bills, you may want to
contact a Consumer Credit Counseling Service (CCCS). This is a non-
profit organization with more than 850 offices located in 50 states
that counsels heavily-indebted consumers. Check the White Pages of
your telephone directory to get the number for the CCCS office
nearest you, or call 1-800-388-2227 using a touch-tone phone. If you
have other questions, write or call:
National Foundation for Consumer Credit
8611 Second Avenue, Suite 100
Silver Spring, MD 20910
For a complete list of consumer and business publications from the
FTC, send for a free copy of Best Sellers at the address listed
Where To Complain
If you have problems or questions about a secured credit card
marketer, contact your local consumer protection agency or state
Attorney General's office. You also may send your complaint to the
FTC. Write to: Correspondence Branch, Federal Trade Commission,
Washington, D.C. 20580. Although the Commission cannot resolve
individual disputes, the information you provide may indicate a
pattern of possible law violations requiring action by the
Facts for Consumers from the Federal Trade Commission
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