Credit card offers are everywhere. Boot up your computer, type "credit card" into your favorite search engine, and you'll be inundated with hundreds (if not thousands) of options. Some cards are objectively better than others, but how do you spot the truly terrible ones?
In short, look for signs that they're too good to be true.
Bad credit card offers might trick you into thinking you're getting a good deal through unbelievable perks and rewards. Ultimately, these cards can harm your financial situation more than help it.
Credit card scams can damage your credit score, as credit card utilization accounts for 20 percent of your TransUnion VantageScore. If you sign up for a bad offer and end up with a card that charges extra fees while hitting you with ridiculously high interest rates, you can quickly become buried beneath a pile of debt that eats up or even exceeds your credit limit. One bad card can tank your credit score for years to come.
Fortunately, it's relatively easy to spot the bogus offers — provided you know the warning signs.
Tips for Assessing Suspicious Offers
Between interest rates, rewards, APR, and myriad other factors, credit card offers can vary widely. To separate the good offers from the bad ones, watch for common red flags:
1. No Credit Check Required
If your credit history is less-than-stellar (or if you're still working to build a credit history), it can be tempting to apply for a card that promises to approve everyone without a credit check. Don't fall for this common trick.
A credit check is required for nearly every major purchase you make. Insurance companies, landlords, and even employers can request a report of your credit history to ensure you reliably pay your bills. If a credit card company doesn't care about your credit score, there's likely something suspicious going on.
2. Shady Promotional Offers
Most credit card companies try to lure you in with promotions such as cash back rewards or low interest rates. Before you get too excited about these offers, it's important to read the fine print.
Plenty of rewards cards
are completely legitimate. The Capital One® QuicksilverOne® Cash Rewards Credit Card
, for example, offers cardholders 1.5 percent cash back on every purchase. Less-above-board offers rope in unsuspecting people with tempting rewards only to blindside them with hidden fees or sudden rate hikes.
According to the Consumer Financial Protection Bureau, credit card companies are required to disclose important information such as fees for balance transfers or purchase transactions. This doesn't prevent shady companies from hiding this information deep within the fine print, so it's important to read everything — not just the marketing materials.
3. Automatic VIP Status
Everyone wants to feel like a VIP. Unfortunately, some companies dangle that carrot to entice people to sign up for sketchy credit cards.
If a company you've never heard of claims you've qualified for a credit card with some sort of special status — whether it's "VIP," "gold," "platinum," etc. — consider it a major red flag. Companies that make these types of offers are usually scammers waiting for someone to take the bait.
Many credit card companies do offer VIP-type status upgrades: Capital One, Barclaycard, and Simmons Bank, for example, offer rewards for users who frequently stay in hotels or travel. The key difference is that you have to earn those upgrades.
For example, the JetBlue Card gives cardholders three points for every dollar spent on JetBlue purchases. Any credit card company that offers free rewards for simply signing up is likely not on the up and up.
4. High Upfront Fees
If a credit card company asks you to pay an upfront fee simply to obtain a card, watch out. The Office of the Comptroller of Currency routinely posts alerts about scammers who pretend to be banks in order to swindle applicants out of hefty deposits. The deposit checks are cashed, but the applicants never receive their credit cards.
The lone exception is if you apply for a secured credit card, which companies will sometimes issue to users who have bad credit. Lenders might ask for an upfront deposit for these cards, but they refund the deposit once the cardholder improves his or her credit.
Before signing up for any credit card, do some research to ensure the company you're dealing with is a legitimate business. Any "bank" that requires a deposit for anything other than a secured credit card is likely just fishing for fools.
In the age of the internet, it's more important than ever to stay safe when seeking credit card offers. It might feel like you have hundreds of amazing options online, but it's important to weed out offers that will do more harm than good. A little caution on the front end can help you avoid a lot of pain down the road.
Interested in finding the best card for your credit needs? Instead of combing the internet for a trustworthy offer — we've already discussed how tricky that can be — our Credit Card Finder service can connect you with credit card offers from a variety of credible lenders.
Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles. The information is accurate to the best of our knowledge when posted; however, all credit card information is presented without warranty. Please check the issuer’s website for the most current information.