Beware Gold and Platinum “Credit Cards” 

If you're looking to build or rebuild your credit, be extremely wary of some “gold” or “platinum” card offers promising to get you credit cards at some point or improve your credit rating. These may appear to be the same kind of general-purpose credit cards issued by recognized banks, but they are nothing of the sort.

Commonly these “gold” or “platinum” cards enable you to buy merchandise only from specialized catalogues. Marketers of these cards often promise that by participating in their credit programs, you will be able to get major credit cards (such as an unsecured Visa or MasterCard), lines of credit from national specialty or department stores, better credit reports, and other financial benefits. Rarely, however, can you improve your credit rating or get major credit cards this way. Often the only major credit card offered to you is a secured credit card that requires a substantial security deposit with a bank. Your credit line is a percentage of that deposit, often less than 100% percent. In addition, many of these card providers do not report to credit bureaus as they promise, and their cards are pretty much worthless in helping to secure lines of credit with other creditors.  

These “gold” and “platinum” credit-card offers are usually promoted through television or newspaper advertisements, direct mail, or telephone solicitations using automatic dialing and recorded messages. People who live in lower-income areas and senior citizens are often the targets of these sales pitches. 

Be wary of “credit card” promotions that: 

• Charge upfront fees, and are vague about additional and/or future costs. Card promoters charge $50 or more for their cards. Only after you agree to pay this fee are you told there's an additional fee, sometimes $30 or more, to get the merchandise catalogues. Yet, these catalogues are the only places you can use the cards.
• Use '900' or '976' telephone exchanges for more information. Don't confuse these exchanges with toll-free '800' numbers. You pay for phone calls with 900/976 prefixes, even if you never get the card. The cost for these calls can be high. If you dial a pay-per-call number mistakenly, contact your local phone company immediately. They may be able to remove the charge from your bill.
• Misrepresent prices and payments for merchandise.
• Don’t allow you to charge the total amount when you buy merchandise from the catalogues. Instead, you often must pay a cash deposit on each item you charge (an amount usually equal to what the company paid for the product). Only after you pay your deposit can you charge the balance. Also, catalogue prices are almost always much higher than average retail prices.
• Promise to easily get you a "better credit”.

How To Protect Yourself

Follow these precautions to avoid becoming a victim of “gold” and “platinum” card scams:

• Think twice about any offer to get "easy credit."
• Be skeptical of promises to erase bad credit or secure major credit cards regardless of your past credit problems. There are no "easy" solutions to a poor credit rating based on accurate information. Only time and good credit habits will restore your credit worthiness.
• Investigate an offer before enrolling. Contact your local Better Business Bureau, consumer protection agency, or state Attorney General's office to see if any complaints have been filed against a particular card promoter.
• If a marketer promises that a card is accepted at certain retail chains, verify it with the stores.
• If a marketer assures you that reliable information about you will be reported to credit bureaus, call the bureaus to confirm that the merchant is a member. Unless a merchant subscribes to the credit bureaus, they won't be able to report information about your credit experience.