Pre-Approved Credit Cards
Whether you are new to the credit industry or not – if you are looking for a new credit card, it’s important to be aware of all of your options. If you have not noticed already, there are dozens upon dozens of different credit card options- all in efforts by credit card companies to offer services to as many consumers as possible. The reality is, there are credit cards for everyone! From excellent credit to even no credit, companies have specialized and dedicated plans for everyone.
With that being said, there is one type of credit card and service offered by credit card companies that raises the eyebrows of consumers. Have you ever gone to check the mail and received a letter with the words: “URGENT”, “ONE-TIME OFFER”, or “YOU’RE APPROVED!”? Chances you have, because everyone nearly has. We are talking about the infamous pre-approved credit card offers. This type of mail can be incredibly exciting and, at the same time, frustrating or annoying, depending on how many you have received so far. Now, these offers and credit cards are often misconstrued, given their reputation.
So, in today’s article, we are going to dive into the depths of pre-approved credit cards and share some important tips and information. We will even discuss a few pointers to look out for and how to pick the best pre-approved credit card for you.
What does it mean to be pre-approved?
Before jumping into any tips or recommendations, we think it’s important to cover the basics to ensure that you are fully prepared and knowledgeable. While it may seem like easy – many people are unaware of what pre-approved credit cards are and how they operate. So, simply put, pre-approved credit cards are simply when a credit card company, based on pulling your credit report, believes that you have meet specific criteria for one of their credit cards. Now, first things first, before any readers panic – these are considered soft-pulls, or soft-inquiries. This is a frequent occurrence for credit holders around the United States and it will never hurt your credit score. In light of this, credit card cards will send multiple offers to credit holders in attempt to get them to apply for that specific card. Keep in mind that, just because you were pre-approved in the mail does not mean you will be approved for that actual card or credit limit. Typically, these are marketing techniques to secure new consumers. There are some benefits that come with this mail-based preapproved credit cards, such as competitive APRs and unique features.
There is also a newer form of pre-approved credit cards, all of which are done digitally. The difference between digital pre-approved credit cards and mail-based pre-approved credit cards is that consumers have to sign-up for the pre-approval process. Similarly, there is no hard inquiry or pull for individuals to get pre-approved for a credit card online. This gives you, the consumer, the opportunity to compare information and rates with other companies, a great tool. However, as we started to cover in this section, there are a few different things that credit card companies do not share about their pre-approved offers.
Advantages and Disadvantages of Preapproved Credit Cards
As with all credit cards, it’s important to consider all aspects before you are quick to sign up for just any deal. With that being said, with a greater understanding of what preapproved credit cards are, now we are going to explore some of the advantages and disadvantages that come with these credit cards.
- Preapproved credit cards give consumers and opportunity to glance at what they can anticipate if they so choose to sign up or apply for that credit card. From here, consumers can use this information to research and compare with other credit card company offers to secure the best deal.
- Typically, preapproved credit card offers come with lower than average APR %; however, it’s vital to read the fine print before you are quick to jump on a deal. You won’t want to sign a contract for a preapproved credit card that has a starting APR of 3% and a go-to APR of 29.99% in 6 months.
- Preapproved credit cards give consumers a glimpse at where they stand in the eyes of other credit card companies and the credit bureau.
- If a consumer is rejected for a preapproved credit card, they have 60 days to request a free credit report.
- Preapproved credit cards may be seen as a marketing trap by credit card companies. Reason being, people who are unaware of how pre-approved credit cards work do not know that in order to receive the offer, one must apply, resulting in a hard credit pull and potentially rejection.
- Preapproved credit cards typically offer great rates for minimal months; however, the moment those months are over, the card’s rates will skyrocket and can be detrimental.
Pre-approved credit cards can be quite tricky, which is why veteran credit holders tend to disregard or get frustrated with frequent pre-approved credit card offers in the mail. The whole idea of a pre-approved credit offer in the mail is incredibly misleading for many consumers as they tend to think that the offer is live and valid. However, credit card companies tend to not share that consumers may still get rejected and, in order to receive the offer, one must apply, which means requesting a hard-pull or inquiry, effectively lowering your credit score. Reason being, when the company sent out the offer, they did a soft-pull of your credit report. Credit card companies will need to look closer at your credit history. Typically, when this happens, credit card companies provide consumers with a lower credit limit than mentioned on the offer, higher APRs, or potentially insanely high fees. It’s essential, as a consumer, to be aware of what is really happening before considering applying for any pre-approved credit card.
5 Important Factors to Consider Picking the Best Credit Card for You
With the information that you have at hand, it’s clear that a pre-approved credit card offer is like any other credit card – and it should be treated equivalently. Just because a company deems that you are qualified for a credit card does not mean it’s best for you until you have done the research and figured out what is the best credit card for you. To better help you out, we have created a short guide and questionnaire to help find the best possible credit card, whether pre-approved credit card or not.
1. What Is Your Credit Score / Strength of Credit Report?
Before you can learn what credit card is best for you, it’s important to figure out what your credit score is and the strength of your credit report. To find this information, you may request your annual free credit report. If you have already received in a few months ago, you may need to purchase an updated report. From there, we highly advise consumers to take the time to analyze their entire report to learn exactly what’s happening with their credit profile. Analyze every single line and area to ensure that it’s accurate and dated properly. If you notice any areas that are of concerned, don’t hesitate to dispute any claims. This will only help improve your credit score.
2. Research Credit Cards Based on Score
With a clearer understanding of your credit report and credit score, you can effectively begin the researching process. This entails looking up different credit cards for your credit score. Whether you are in the 750+ bracket or below 600, there are dozens of different credit cards. Be sure to take the time to look at each different one. You will want to look at what credit limits the company offers, what their current fees and rates are, what is their APR, and the applicable benefits and features.
3. Read Pre-Approved Credit Offer
This step is all about reading the entire pre-approved credit offer, features, and contract. Typically, when a credit card company sends out pre-approved credit offers, they share with you all pertinent information, including interest rates, fees, APRs, limits, and other applicable information. Much of this information will most likely be found on the back page of the offer in the fine print. Before you are quick to jump on just any pre-approved credit offer, it’s important to move on to step number two as it will lead you to further research and analysis when judging what credit card is best for you.
4. Research Company Reviews
Based on the information that you have extracted thus far, you probably have a good idea of the different credit cards that you like and the companies that are intriguing. With that being said, a great method or tactic to employ when picking out the best credit card is to research company and credit card reviews. While some reviews may be biased – we suggest aiming for reviews that are in the middle. Typically, reviewers that stick between the 2-4 star range tend to be the most honest – minus the exaggerations.
5. Call Companies or Schedule Meeting
This may seem like a stretch to some readers; however, we highly recommend to consumers calling different credit card companies or scheduling meetings if a physical branch is easily accessible. The reason for this is that a credit card is valued financial decision and it’s important to select the best company for you. If you have problems with your credit card and need to speak with a representative, you will need to contact their customer service team or visit their branch. Are they friendly? Did they help you? Are they willing and able to answer your questions? By taking the first steps towards calling a credit card company that you are interested in or scheduling a meeting at a local branch – you will learn a lot about a company and make the decision process that much easier. At the same time, you will get a clearer picture of what reviewers were mentioning regarding customer service, a frequently underestimated component of credit cards.
From Helpful to Frustrating
As we discussed in the beginning of this article pre-approved credit cards can both be exciting and help and incredibly frustrating and annoying to some consumers. It’s clear that pre-approved credit card offers provide some unique benefits; however, after receiving the 10th or 15th notice in the mail, you may feel a bit overwhelmed, especially if you have already selected your new preapproved credit card. As a result, as a knowledgeable credit holder, you have the ability and power to request credit card companies to stop sending you mail.
One way that consumers can opt-out of receiving anymore mail on preapproved credit card offers, you can visit www.optoutprescren.com or call the company number at 1-888-5-OPT-OUT, or 1-888-567-8688.This is actually, as the website mentions, the official Consumer Credit Reporting Industry website -so that you know this is a trusted company. In doing calling this number of visiting the website, this will stop credit card companies from sending preapproved credit card offers for up to 5 years. However, if you are exhausted of preapproved credit offers, you may permanently opt-out of these notifications as well by filing a Permanent Opt-Out Election Form.
When it comes to pre-approved credit cards, it’s important to always consider the options that are available to you. In our opinion, pre-approved credit cards can prove to be extremely beneficial and a great option for consumers. In fact, many consumers tout how great preapproved credit cards are and how they have helped improve their credit score ten-fold.
However, as a responsible credit-holder, it’s imperative to take the time to do proper research and treat a pre-approved credit card offer just like any other credit card. You must perform the proper research, look at specific information, like interest rates, fees, and features, and study what previous customers have said. The best way to approach any pre-approved credit card is with knowledge, confidence, and security that you know what’s best.
Financial Advisor - Best.CreditCard
David is our in-house financial advisor with years of experience in the credit card industry. He became interested in credit cards after working for several years at a major bank. He holds a Masters Degree in Finance.