Secured Credit Card Scams

Secured credit card scams prey on those individuals who are looking to either build good credit or repair bad credit. These cards promise you a credit card, but may or may not actually issue one. The problem with these secured credit card scams is that they prey on people who are in need or in real financial trouble. I hate that!




Let’s talk about what a secured credit card is. This is a credit card that is secured by a bank account. You deposit money into that account and you can borrow up to a certain percentage of it. The percentage rate is usually from 50 to 100% of the balance. Once you start making charges, the bank account is reduced by that amount plus fee and interest. As you pay off your charges, the bank account balance increases and therefore so does you available line of credit. Many of these cards have an application fee, a high interest rate, and some even have a monthly usage fee as well as a yearly fee. In addition, these fees will be taken out of your available balance upfront, so that the amount of your credit line is reduced. These fees can be significant so be sure to read all the fine print. If you read over the contract carefully you will be able to decide if it’s legitimate or one of those secured credit card scams.




A legitimate secured credit card will tell you up-front all of the charges and fees associates with the card. You will know what amount of money you have to keep on deposit. Most of the legitimate cards are with banks and they pay a nominal amount of interest on your deposited account, but not all do. Also, a legitimate secured credit card offer may have a website and a toll free number to call and apply. A 900 number is a clear indication of secured credit card scams. No bank will have you call on a 900 toll number.




Secured credit card scams will look like legitimate offers but there are some key things to look out for. Please be careful when you see these warning signs: everyone is approved, we guarantee you’ll get approved, a 900 or other toll prefix (other than a legitimate area code), no mention of fees or interest rates. If you are unsure about a particular offer you can do several things. If you believe it is a scam, avoid it. Your gut feeling will let you know if it sounds too good to be true. If you are unsure, call your state attorney general’s office and ask them if this is a known fraud or scam. They will be happy to help you, and if they feel the offer is in violation of any laws or if they think it is a possible scam they will tell you and go after the company making the bogus offer. You can also check out the FTC for information about current scams. They are the ones who control interstate banking in the US and they will be happy to help you. A lot of their information is also available in Spanish.




We want you to be able to build good credit if you are just starting out. For those of you trying to correct bad credit we are there for you as well. It can be a long hard battle to regain good credit. The last thing anyone needs is to be taken in by a credit card scam. These companies are preying on individuals who cannot afford to lose the money they have. Actually, none of us can afford to throw our money away on scams. Let’s stop these guys in their tracks. Check out any company you plan to do business with. Report those that sound too good to be true. Finally, get a good secured credit card to rebuild your credit. Do not be the victim of secured credit card scams.