Last Updated : 07 April 2010 at 17:30 IST
Now, credit cards to cash in on gold!
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Yes, a new Gold Bullion card is slated for launch in the second or third quarter of 2010.
With a regular secured card, the dollar amount of the deposit determines the credit limit. With the Gold Bullion Card, the customer receives a credit limit based on 75 per cent of the value of the gold coins at the time of deposit. Consumers can submit a variety of coins, including American Eagles, Austrian Philharmonics and South African Krugerrands.
According to media reports, people tend to buy gold when they fear that their country is going to hell during a recession period like the one witnessed during 2008-09.
The problem with having a stash of gold lying around is that it’s not an easily convertible currency. As always, however, one person’s problem is another person’s business opportunity. The solution for people wanting to be able to turn their pot of gold into tangible goods should the need arise? A credit card backed by gold.
This is what the issuers of a new type of credit card, the Gold Bullion Card aim to supply. According to reports, people put a stash of gold coins on deposit with Gold Solutions Marketing, Inc, the issuers of the gold-backed credit card. In return, they get a Gold Bullion Credit Card with access to a credit line equal to 75 per cent the value of the deposited gold coins. Why not a full 100 per cent? By offering a lower percentage, the card safeguards against drops in gold’s market price, protecting consumers against unexpected dips in their credit line. However, if the price of the gold coins goes up, cardholders may enjoy a parallel credit line increase: according to the company behind the card, credit lines are set to be adjusted every six to twelve months.
While the card might seem like an ideal solution for those looking for ways to put their stash of gold coins to good use, it comes with numerous caveats. In addition to an annual fee, projected to fall somewhere between $50 and $100, the Gold Bullion Card will feature some rather unusual costs, including a storage fee for deposited coins and a transaction fee for the purchase of new coins, necessary for cardholders wishing to increase their credit limit.
Similarly, cardholders wishing to make use of the credit limit created by their gold deposit will pay an annual percent interest to use the credit line backed by their money. The card’s interest rate will likely range between 8 to 13 per cent.
The company accepts a variety of coins, including American Eagles, South African Krugerrands, and Austrian Philharmonics. Cardholders can sell off or request the return of deposited coins at any time, but will see a corresponding decrease in credit limit.
Because all coins are stored in the same, high-security account at the Fidelitrade Vault in Deleware, cardholders reducing their deposit or closing out their account will likely not receive back the same coins they sent.
(Source: Credit Card Guide News)
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