Get Yourself a Secured Credit Card!

Either secured or unsecured cards can be used to pay for goods and services. but a secured card requires you to open and maintain a savings account or provide a deposit as security for your line of credit; an unsecured card does not.

The required deposit for a secured card could range from a few hundred to several thousand dollars. Your 'credit line' is a percentage of your deposit ranging generally from 50 to 100 percent. A bank will normally pay interest on the security deposit.

Additionally there may be application and processing fees involved and at time they could be hundreds of dollars. Before you apply for a secured credit card know what the fees are and if those fees will be refunded if you're denied a card. Secured cards normally require you to pay an annual fee and they have higher-than-normal interest rates than an unsecured cards due to the increased perceived risk by the issuer.

When considering a secured card as a way to build or re-establish a credit history make sure the card issuer reports to a credit bureau so that your payment performance can reflect positively on you with the credit reporting agencies If the issuer doesn't report to a bureau, the card won't help you build a credit history and you would be well advised to look at other offers.

Ads like the example above are tempting if you have a poor credit history or no credit at all. Beware of such ads because while secured credit cards can be an effective way to build or re-establish your credit history, some shady marketers of secured cards make deceptive advertising claims to entice you to respond to their ads.

The Federal Trade Commission (FTC) has taken action against companies that deceptively advertise major credit cards. The scam ads may offer unsecured credit cards, secured credit cards, or not even 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 more
   

• The required security deposit, application, and processing fees
   

• 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.

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.

Where To Complain

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or to get free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

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