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Stay away from AmTrade cards!

By Janna Herron ·
Thursday, September 26, 2013
Posted: 6 pm ET

The federal government warned the public on Wednesday about a credit card scam by AmTrade International Bank.

AmTrade, supposedly located in Fort Lauderdale, Fla., has been sending offers for secured credit cards in the mail to consumers, according to the Office of the Comptroller of the Currency, or OCC. The solicitation requests that the consumer send a check in amount between $500 and $900 to the bank as a deposit of the secured credit card. The check is cashed, but the consumer never receives the card.

The OCC says the offer from AmTrade sometimes mentions Credit One Bank, but that bank is not connected to the offer.

AmTrade's website and business phone number are no longer in service, the OCC says.

Secured credit cards are marketed to people with bad credit or no credit who are looking to build their credit history. The card issuer requires an upfront security deposit, typically between $300 and $500, to serve as collateral against the card's credit line, which equals the deposit amount. The deposit is usually placed in a savings account, money market account or certificate of deposit while the card account is open. In some cases, a secured credit card can be turned into a traditional, unsecured card after a year or so of good payment history.

It's not unusual to send a check to the bank for the secured credit card's deposit, depending on the bank's policies. For example, Bank of America allows consumers to mail a check or transfer funds from a bank account, says company spokeswoman Betty Riess. But Capital One only allows a fund transfer by phone or online to get its secured credit card. It does not accept checks, says Capital One spokeswoman Sukhi Sahni.

Before sending money to any bank for any kind offer, research them first online. Bankrate offers Safe & Sound ratings for banks, credit unions and thrifts. The Federal Deposit Insurance Corp., a government agency, has a bank locator on its website. The National Credit Union Administration, another government agency, also has a credit union locator on its website.

Have you come across a credit card scam?

Follow me on Twitter: @JannaHerron.

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