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Separated? - Divorced? - Bankrupt? - Widowed?
Bad Credit? - No Credit? - No Problem!
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 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.
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
To avoid being victimized, look for the following signs:
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 worthiness.
See Web Site on Credit Repair Scams.
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.
See Web Site on Fair Credit Reporting.
"Secured Credit Card List"
BHA Customer Service
524 Branch Drive
Salem, VA 24153
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.
See Web Site on Choosing a Credit Counselor.
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:
Consumer Response Center
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 Commission.
Although the FTC cannot resolve individual problems for consumer, it can act against a company if it sees a pattern of possible law violations.
In addition, contact the National Fraud Information Center (NFIC), a project of the National Consumers League, at 1-800-876-7060, 9 a.m. - 5:30 p.m. EST, Monday - Friday. NFIC is a nonprofit organization that operates a consumer hotline to provide services and assistance in filing complaints. NFIC helps the FTC and state officials by entering complaints into a computerized database to help track and identify fraud operators.