If you are a member of the unfortunate group of people who have less than perfect credit, or poor credit, you know how tough it is to get approved for any kind of a normal credit card. Many times the credit card offers you do receive are disguised as being legitimate when in actuality they are a rip-off. They offer inflated fees, astronomical interest rates and ridiculous terms. These companies target consumers with poor credit who are trying their best to rebuild it and take advantage of their situations. Let's take a closer look at one such credit card offer that is going around these days. There are several different credit card companies that send out pre-approved credit card offers disguised as legitimate Visa or MasterCards, when really they are credit cards for store clubs or catalog clubs. The offer tells you that you are pre-approved for a credit line of up to $5,000 with no security deposit. They make you believe you'll be rebuilding your credit and enjoying the convenience of having a credit card in your wallet. It sounds so good doesn't it? Your desperate for a credit card and this wonderful offer comes in the mail. I get these myself, but let's take a closer look at the fine print and what this is really about. Here is a typical headline in the letter you get. "Congratulations! You have been pre-approved for a Visa card with a $5,000 credit limit!" It goes on to say that all you need to do to activate your card is to verify your personal information, sign it and send back the pre-approved application. Your new card will be sent immediately. If you continue reading the entire document you will find that this isn't a regular Visa credit card. It will only allow you to make purchases with the credit card in their special "store" or "online catalog". You can't use it anywhere else. The products usually consist of non name brand items like electronics and house ware products. A little further down the letter it states that in order to activate your new credit card you'll need to send in a check or money order for $299.00 to cover the activation or new account fee. Of course you'll immediately get a discount on your first purchase. Some companies will also charge an annual fee of another $100-$200 on top of the activation fee. It's not beginning to sound like such a great offer now is it? This is just one example of many that are sent out to unsuspecting consumers in the mail every day. Here are just a few things to watch for with any credit card offer: You can only use the new credit card to make purchases through the company's online catalog or store. The items are priced much higher than you can purchase them elsewhere. You're trapped into using the card for these purchases only. The credit card has ridiculously high fees, such as hundreds of dollars of an activation fee, joining fee, annual fee, or monthly account fees. These fees are how the credit card company makes its money off the backs of consumers who are desperately trying to rebuild their credit. High interest rates. Credit cards from companies like this can often have APR's of anywhere from 25% all the way up to 45% or more. You have to read the fine print and keep this in mind. The best thing you can do with an offer like this is to take it and throw it in the trash. Take the $250 you would spend to open an account with one of these credit cards and spend it on a secured credit card instead. You can easily get a Visa or MasterCard with a security deposit. These companies report your payments to all the major credit bureaus each month and before you know it you'll be on your way to rebuilding your credit. Keep this in mind the next time you receive one of these fantastic new credit card offers in your mailbox. |
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