Spotting Common Credit Card Scams
March 20, 2008
If you have been considering the idea of sign up for a credit card, there some things that you should know before you apply for that card offer you received in the mail. There are hundreds of different types of credit cards available today. Each of these cards has their own distinct rewards packages, rates, and terms of use.
Since there are so many out there, you need to know more about them; to do that, you need to do some research. After all, you probably want a card that will best meet your needs and provide incentives for using them that are appealing to you as well.
While all of these are important aspects of searching for the right credit card, by taking the time to know all you can about credit cards, you protect yourself from some of the common credit card scams. There are card companies out there that unscrupulously take advantage of people who apply for cards without knowing much about credit cards or how they actually work.
The stakes are high when you consider how many people have gotten into serious financial trouble through misuse of cards that use policies that work against the consumer and favor the card issuer. Having the right information about credit card scams can help you spot the most common ones while you’re still searching.
Here are three of the most common types of credit card scams being circulated through offers received in the mail and via the internet.
Cards that require fees be paid in advance. There are numerous card offers out there for cards that very low interest rates and larger limits. They typically sweeten the deal by explaining how this card is available to virtually everyone regardless of credit type. All they ask that you do for approval is to pay a low and reasonable fee in advance.
It seems simple enough and not at all unreasonable when the benefits are so generous. They say that the fee is for processing the application or for pre-approval status. In the end, if you pay this fee, you are very likely going to be left high and dry—and the card company will never contact you again. They got what they wanted: your money!
Credit protection programs. This can be a tricky one because there are regulations in place to provide protection for your credit in the event that a card is lost, stolen, or used without your personal consent. You will not be held responsible for the amount of the unauthorized charges. Federal regulations place limit on the amount to $50 that you will have to pay if your card is used by someone else to rack up a huge balance.
Here is where the scam comes into the picture. There are companies that operate scams by offering credit protection programs. These companies play upon the ignorance of consumers and cardholders who do not know the sort of protections they already have under the law. You will be losing your money on the purchase of such services and it is unlikely you will see any collection settlements on claims.
Debit Suspension. In situations where you are unable to pay the balance of your card due to an unforeseen illness or other circumstances, most major credit card companies offer what is called “debt suspension.” This service literally suspends the debt so you do not have to pay your bill. It is a pause in your payments and provides a period to get things back in order so you can resume regular payment of the balance.
During this period, your account will not be charged interest, even though you can still use the card. The scam is that there are companies offering this protection for a price when the credit card company or insurance provider provides it to the consumer free of charge. These types of businesses prey upon the ignorance of the cardholder.
The final analysis: Be aware of what is going on with your credit card. Stay informed so you will not fall for a clever credit card scam. You’ll save yourself time, money, and a lot of headaches.