Credit Cards » Credit Card News » Credit Card Protection: Not A Smart Move
Date June 28, 2009

Credit Card Protection: Not A Smart Move

The credit crisis has everyone worried about their financial stability. In this tough economic times, credit cards have become a vital life line for every American consumer. Thus, their worries about not being able to make the monthly payments and losing available credit is quite valid. It is also quite understandable why many American consumers are very interested in protecting their credit. However, one thing they should never do is get credit card protection. Here is why.

Credit Card Protection: Not A Smart MoveAmerican consumers have probably seen these offers for credit card payment protection plans smartly inserted along with their monthly bill statements. Most plans cost around fifty cents to the dollar for every balance of one hundred dollars to buy. According to the plane, when you are unable to pay off your bill, your payment protection plan will be activated. When it does, the plan will pay your bill’s minimum amount due or a fixed amount, depending on the plan. The plan will also help you avoid ruining your credit score because, when the plan becomes active, the credit company will not report the situation to the credit bureaus. Credit card companies are, ostensibly offering these plans to help you recover whenever you miss out on your monthly payments.

Consumer advocates are not impressed with credit protection plans, however. According to them, these plans are too costly to be of any benefit to consumers. Plus, they provide a false sense of security to credit card holders.

According to CEO of LowCards.com, a website offering credit card information, Bill Hardekopf, consumers who buy into these credit protection plans are liable to find themselves in deep trouble. While the credit protection plan does pay your bill when you can’t, it will not protect you from interest rate charges. The interest rate fees plus the upfront cost of the credit protection plan would only make your debts larger. Thus, in the event that you actually use your credit protection plan, you will end up in deeper financial trouble instead of the other way around.

Hardekopf elaborated that, if you carry a balance of ten thousand dollars, you would be paying a hundred dollars every month for the credit protection plan. This is already a considerable cost and, what’s more, this cost is added to your balance and you are earning interest because of it. “Just the sheer cost of it is probably the biggest knock against it.” Hardekopf said.

Another problem is that, while the plan will pay your bills if you go overdue, it probably won’t pay all of it.  That means that you are likely to accrue interests even with the credit protection plan in place.

Date June 24, 2009

A Scam Called Vishing

It has long been known that credit card security is basically a running joke among scammers who make a living out of stealing people’s identities to make a quick buck. There are many ways wherein a credit card holder can lose control of his credit identity and end up in deep debt of purchases not his own. It seems that another type of credit card scam has been detected. They are calling it “vishing” and it is as insidious as they come.

A Scam Called Vishing“Vishing” is a play on the word “phishing”. Phishing is a type of scam which is popular online. The main purpose of the scam is to pose as a legitimate person or company and fish (“phish”) for the personal information of people connected to the internet. The key to a successful phishing scam is being able to convincingly impersonate a legitimate and trusted company or person.

Vishiing seems to have taken the scam of phishing offline and into the real world. Whereas in phishing, the common hook was a fake (but legitimate looking) e-mail, in vishing, the hook is a phone call. In vishing, the scammer makes a call to the victim and poses as a bank or credit company to get important details from a person. The key to the scam is the ability of the scammer to make the Caller ID of the phone display a legitimate number. With a seemingly legitimate caller ID, the victims are more apt to trust the caller and give up sensitive information to the scammer.

During a vishing scam, the scammer will make a call to their victim who they have already profiled thoroughly. The only thing they lack will be some important credit card information which they need to scam the victim’s credit card line. When the call is answered by the victim, the scammer will then tell him that the scammer belongs to the security department of the victim’s credit company. The scammer will inform the victim that he is getting the call because his credit company (the one the scammer is posing as a representative of) has detected a suspect purchase made on his credit card. The victim will then be asked to verify certain information which the scammer already knows from profiling the victim at an earlier date. The scammer will then ask the victim for some information from his credit card. This information, along with the other personal details of the victim, will be what the scammer will use to defraud the victim.

To avoid being victimized by vishing, if you receive a similar call as this, ask for the caller’s employer ID and their name. Then immediately hangup and call your credit company to verify if the person actually does work for them.