Learn to Identify The Most Common Credit Card Scams
Whether you’re using a credit card for the first time or have been using it for years, you should be aware of the many different scams you can possibly get exposed to. While most credit card companies have excellent reputation, there are also an equal number of shady ones out to get your money.
If you are totally naive of the ways in which these crooks operate, then you can wind up as one of their victims. Below are three of the worst yet most common credit card scams. Study them so you don’t get ripped-off.
Suspension of debt service
Suspension of debt is a service occasionally extended by banks as a means to “help” you stay current with your payments. This scam will require you to pay a predetermined fee every month, guaranteeing that no interest will ever accrue in case you can not pay your bills.
While this sounds too good to be true initially, the scheme really aims to fleece its victim. You’re disallowed to use your card if you’re unemployed, and while no interest has accumulated, your balance stays unpaid and you still have to pay it when you find work again. What happened is you’ve been paying for something that won’t be of much use to you.
If you’re offered a credit card, first verify that a debt suspension offer of this kind is not inserted in the agreement as this will cost you later. If it is included, then have it taken out and get a standalone insurance policy to assist in your bill payments in the event you are unemployed.
Advance approval fees
This scam is one of the worst there is and the victims are people who are in dire need of a card that has great rates. The “operator” will provide you with such a card but you need to pay an approval or administration fee in advance for your application to be processed.
After the payment is made, the company will disappear and look for its next mark. If a credit card is offered where an advance approval fee is required, then you are being scammed. You don’t pay advance fees for cards even if you have bad credit. The lender can just approve or reject your request, not ask for fees.
Card protection scam
Another prevalent credit card scam is one that offers high-priced credit safeguards to your card if ever it gets stolen or lost. The extra fee for your card’s “protection” is ridiculously high compared to the coverage which is almost none.
You’re not likely to lose much if you immediately report your lost or stolen credit card, and you’re already covered by insurance or consumer protection. If protection is really necessary, then contact an independent company for a standalone policy which will be cheaper yet will cover all your cards at one go.
If you’re applying for a credit card, be sure to read and check out all the angles of the contract before signing. If anything is not above board, then back out and look for another card company. As long as you are not ignorant of the different credit card scams, you will be able to come upon a reliable card company that can offer you the best deals.
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Tags: credit cards, Finance, Payment Protection Insurance, PPI