Whether this is your first time using a credit card or you've had one for years, it's important to know about possible scams. Even though there are a lot of honest credit card companies, there are also a lot that are out to get you. If you don't know how to protect yourself from being tricked or misled, you could lose a lot of money. Here are some of the worst credit card scams and what you can do to stay away from them:
Stopping debt
Banks sometimes offer debt suspension deals as a way to "help" you keep up with your payments. The way debt suspension works is that you pay a certain amount each month, so that if you can't pay your bills, no interest will be added during this time. At first, this may seem like a good idea, but the benefits aren't that great. You can't use your card while you're out of work, and even though no interest is added, your payments aren't made either. This means that when you get back to work, you still have to pay off the balance. Basically, you're paying money for something that won't help you much. If you are getting a credit card, make sure that you don't have to pay extra for this type of offer to stop paying your debts. If it is, get it taken off and find an insurance policy that will help you pay your bills if you lose your job.
Fees up front
The advanced fees scam is one of the worst kinds of fraud because it takes advantage of people who are desperate to get a credit card with good rates. The "lender" will give you a card with a great rate, but you have to pay an administration or approval fee up front so that they can process your application. After you pay this fee, the company probably won't contact you again. If someone gives you a card but wants you to pay for it up front, just say no. Even if you have bad credit, you shouldn't have to pay fees for cards up front. A lender should either accept your application or turn it down, and you shouldn't have to pay any fees.
Protection for credit
One of the most common scams is to charge you a lot of money to protect your credit card in case you lose it or it gets stolen. Most of the time, this protection costs a lot of extra money and doesn't cover very much. If you report your card stolen right away, you probably won't lose much, and other insurance policies or consumer laws may already protect you. If you really want protection, get a separate policy from a separate company. It will be much cheaper and will cover all of your cards at once.
If you're getting a credit card, make sure you read and reread all of the terms of the agreement you're signing. If anything about the company seems odd, don't sign and look for another one. As long as you know the risks, you'll be able to find a fair and honest credit card company that can give you good rates.
