Unfortunately, bad credit cards are no longer the only type of credit scam out there. Even though they’re the most prominent, there are more and more people willing to take advantage of anyone in need. Part of this probably stems from our struggling economy — more people are struggling financially, and more people need credit. Part also comes from the fact that we’re an increasingly credit based society.
Regardless of the reasons, though, it’s important that you recognize the signs of bad credit cards and credit scams before you get sucked in.
Warning Signs of Credit Scams
Here are some warning signs that you’re falling victim to a credit scam.
-They advise you to use an EIN to get a new credit card. An EIN is a business’ version of a SSN, and it is completely illegal to use one unless you’re actually forming a business.
-They charge an upfront, non-refundable fee for your application. No loan or credit card should charge a fee just to apply.
-Their promises seem excessive. If something seems too good to be true, follow the old adage and think about it, because it probably is. Read fine print and look for loopholes in their promise.
-You can’t find anyone else who’s successfully used this service or form of credit. That’s a big warning that those people probably don’t exist.
Warning signs of bad credit cards
The warning signs of bad credit cards are similar to credit scams. In fact, all of the above advice applies to credit cards, too: they shouldn’t ask for an EIN or charge an application fee, and you should be able to find other people who use the card.
In addition, watch out for:
-Extremely high interest rates, often hidden (for example, the company loudly advertises a 5% interest rate, but when you read the fine print, that’s only for the first month — after which the charges skyrocket)
-Hidden fees for anything ranging from not using your card to using it too often
-A suspicious willingness to lend to someone with a poor credit rating. If your score is less than ideal and you’re having trouble getting a card, you might be tempted ‘not to look a gift horse in the mouth.’ But if you don’t, don’t be surprised when it turns around and bites you.
Credit scams are mounting, so it’s up to you to recognize the signs and protect yourself. Learn about good and bad credit cards so you’ll know what you’re up against!
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