Facts for Consumers from the Federal Trade Commission

Gold and Platinum Cards -- July 1994

If you're looking for credit, be wary of some `gold' or `platinum' card offers promising to get you credit cards or improve your credit rating.

While sounding like general-purpose credit cards, some 'gold' or 'platinum' cards only permit you to buy merchandise from specialized catalogues. Marketers of these credit 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 and department stores, better credit reports, and other financial benefits.

Rarely, however, can you improve your credit rating or obtain major credit cards by purchasing 'gold' or 'platinum' credit cards. Often the only major credit card you might obtain is a secured credit card that requires you to make a substantial security deposit with a bank. In addition, many of these credit-card offerors do not report to credit bureaus, as they promise, and their cards seldom help secure lines of credit with other creditors.

Such 'gold' and 'platinum' credit-card offers are usually promoted through television or newspaper advertisements, direct mail, or telephone solicitations using automatic dialing machines and recorded messages. People who live in lower-income areas are often the target of these sales pitches.

What To Watch Out For

Be wary of 'gold' and 'platinum' card promotions that:

Charge upfront fees, without saying there may be additional costs.

Some 'gold' or 'platinum' credit-card promoters charge $50 or more for their card. Only after you agree to pay this fee are you told it costs extra, sometimes another $30 or more, to get the merchandise catalogues. Yet, these catalogues are the only places you can use these cards. Find out total costs before ordering any such card.

Use '900' or '976' telephone exchanges.

`Gold' and 'platinum' card advertisements may urge you to call telephone numbers with '900' or '976' exchanges for information about these cards. Remember: you pay for phone calls with these prefixes -- even if you never get the 'gold' or 'platinum' card offered. The cost of the call could be as high as $50 or more. Before you call, be sure you know the total cost of the call.

Misrepresent prices and payments for merchandise.

To purchase something from 'gold' or 'platinum' card catalogues, you're not permitted to charge the total amount on your card. 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 rest of the cost, and prices in these specialty catalogues are usually much higher than those at most discount stores.

Promise to get you "better credit" easily.

`Gold' and 'platinum' card marketers like to promise that it's easy to get major credit cards such as Visa or MasterCard after using their cards for a few months. In fact, the only Visa or MasterCard these marketers usually can get for you are secured. That is, you first must deposit a sum of money in a bank account, often $300 to $500, and the total you can charge on the credit card is limited to that amount. (Secured credit cards are available from banks, finance companies, and other credit card issuers even to those who do not buy a 'gold' or 'platinum' card.)

Some of these marketers promise to report your prompt payment for merchandise in their catalogues to credit bureaus, in order to boost your credit rating. In fact, many 'gold' or 'platinum' card merchants do not report to credit bureaus. As a result, using the card will not improve your credit rating.

How To Protect Yourself

To avoid being caught in a 'gold' or 'platinum' card scam, take these precautions.

Think twice about any offer to get "easy credit."

There are no "easy" solutions to a poor credit rating that is based on accurate information. Be skeptical of any promises to erase bad credit or to secure major credit cards regardless of past credit problems -- whether they come from 'gold' or 'platinum' card offers, credit repair schemes, or similar plans.

Before agreeing to any gold card offer, investigate it thoroughly.

You may want to contact your local Better Business Bureau, consumer protection agency, or state Attorney General's office to see if any complaints have been lodged against a particular promoter of 'gold' or 'platinum' cards.

If a marketer promises you that a credit card is accepted at particular retail chains, call those stores to make sure the promise is true.

If a marketer assures you that credit bureaus will get reliable credit information about you, call those bureaus to confirm that the merchant is a member of the credit bureau. Unless 'gold' or 'platinum' card merchants are subscribers to credit bureaus, they are unable to report information concerning your credit experience.

Be cautious about calling '900' or '976' telephone numbers.

Making phone calls with '900' or '976' prefixes will cost you. Do not confuse these exchanges with toll-free '800' numbers where the company pays for the call. If you mistakenly call one of these numbers, contact your local phone company immediately. You may be able to have the charge removed from your bill.

For More Information

If you want more information on your credit rights or on '900' telephone numbers, contact the Federal Trade Commission (FTC) for free single copies of the following publications:

Building a Better Credit Record Fix Your Own Credit Problems Solving Credit Problems 900 Numbers: New Rule Helps Consumers Contact: FTC, Public Reference, Washington, DC 20580; (202) 326-2222. TDD (202) 326-2502. You also can request a copy of Best Sellers, which lists all the FTC's consumer and business publications.

If you have problems or questions about 'gold' or 'platinum' cards, contact your local consumer protection agency or state Attorney General's office. You also can contact the National Fraud Information Center at 1-800-876-7060 (9:00 a.m. - 5:30 p.m., EST, Monday - Friday). NFIC will forward all appropriate information to the FTC.


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