In personal finance, simple ideas are often good ones. Once they get complicated, you have to keep an eye on your wallet.
Take secured cards. They're the only credit cards available to people who don't qualify for regular cards -- perhaps because their income is too low, or because they formerly didn't pay their bills.
You can get a secured card from a good bank without paying high application fees. But some issuers are wrapping their cards in membership organizations, for an extra fee. These groups also sell life insurance, which consumers may feel forced to buy in order to get the card they want.
But hear this: If you qualify for secured credit, you can get it without forking over a lot of money for membership "extras."
To get a typical secured card, you deposit a minimum sum -- say, $250 to $500 -- in an interest-paying savings account. The bank gives you a credit card with a credit line roughly equal to your deposit. For example, you might be able to charge $250 to $500 worth of goods.
If you faithfully pay your bills, you start to build a good credit record. Eventually, you'll qualify for an unsecured card, at which point you get your deposit back.
Conversely, if you don't pay your bills, the issuer can take what you owe from your savings deposit.
The following two low-cost secured cards are among those recommended by RAM Research in Frederick. Neither of them charges an application fee; both pay 5.25 percent on your savings deposits; and both accept consumers with past credit problems, including discharged bankruptcy, as long as you're solidly back on your feet.
* American Pacific Bank in Portland, Ore., (800) 879-8745 -- a $30 annual fee; charging a variable rate of interest (minimum: 18.9 percent) on unpaid balances.
* Dreyfus Thrift & Commerce Bank in Garden City, N.Y., (800) 727-3348 -- a $25 annual fee; charging a fixed 19.8 percent on unpaid balances.
Skip any bank or middleman who tries to nick you for higher fees. That includes banks that charge application fees of $65 to $85; banks with 900 telephone numbers (charges for these calls could run as high as $25, according to the Bankcard Holders of America); anyone who tells you that getting a secured card is "guaranteed"; it's not; any classified ad asking $15 to $50 just for sending you a secured-card application. Banks will send applications free.
For a full discussion of the various cards, and detailed information on the kind of applicant each bank is willing to accept, send $10 for RAM's Secured Card Report, Box 1700 (College Estates), Frederick, Md. 21702.
What if you don't have at least $250 to deposit?
New "membership organizations" secure your card with insurance or annuities. You can put up a policy that you already own or buy a new policy that the organization sells. If you default on your credit-card bill, the money will be taken out of your insurance savings.
The groups offer odds and ends of other services, for fees ranging from $24 to $39 a year.
Three such groups: the National Consumer Credit Guarantee Association Ltd. (NCCGA), in Portland, Ore.; the Fresh State Credit Association in Lakewood, Colo.; and FIMCOUFSA Financial Insurance Marketing in Pompano Beach, Fla.
I have mixed feelings about this deal.
If you have no savings, little or no life insurance, will keep up the policy you buy and won't seek cheaper alternatives, it's better than nothing. But it would be better to save up $250 for a traditional secured card and buy a separate insurance policy.