Something’s Phishy

Dear Brain,

It seems like every day I am getting email or mail for a new credit card promotion. I’m always skeptical of scams and don’t want to be taken. Do you have any advice regarding these solicitations?

thank you,

ali sareen – brampton, ON

Ali,

Be careful of email spam. It’s quite possible that the offer could be legit, however there are a lot of criminals on-line who are just looking to defraud you or capture your personal information for identity theft.

Regarding snail mail offers – direct marketing has become a very sophisticated marketing tactic and as a result, oftentimes you are sent these promotions because they are a perfect fit for your customer profile. My suggestion here would be to read the fine print and really understand the offer – it may be just what you are looking for.

– Credit Brain

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2 responses to “Something’s Phishy

  1. Dear CreditBrain – how do i post my questions? should i email you?
    my credit card company asked me if i was interested in opening a line of credit. i pay off my credit card each month. but my cc company said if i run into trouble where i lose my job and i can’t pay off my credit card i can use the line of credit that is at a lower interest rate at 6% rather than using my 19% credit card interest. i don’t plan to use the credit line but i’m thinking about just opening it in case of an emergeny. should i do it?

    thank you,
    tara s

  2. Hi Tara,

    thank you for your note. first off, you can email me directly at creditbrain(at)cleanslatecredit(dot)ca. otherwise, feel free to post questions as comments like you just did.

    secondly, the line of credit is another arm offered by a bank to get you to borrow more, so they can generate more interest. the scenario they want is to have you borrow more money from them, just so you can make the payments on your credit card. this effectively drives your interest rates up even further (to over 25% when you consider the compounding). also, there is no “grace period” associated with the line of credit, so it starts to accrue interest the day of the loan – this explains the lower interest rate.

    6% is not a bad rate, though for comparison purposes, mine is 4.75% (however it is secured by assets).

    since you’re a “dead beat” – paying of your card in full each month, my suggestion would be to decline this offer. if you encounter an emergency, hopefully you’ll be able to curb your cc spending and use your savings to take care of the situation.

    if absolutely necessary, you could open the line of credit at that time.

    remember, the best way to avoid paying interest is to not borrow money.

    cb

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