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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