You’ve probably been there: you go to your mail box and open up that pre-approved credit card offer that makes you feel like a million bucks. A credit card company has chosen you for this brand new, incredible offer and the offer is typically an extremely tempting one. However, it’s important to know that the pre-approved offer that makes you feel like a million bucks could wind up costing you a million bucks in the long run.
What is a pre-approved offer?
Your personal information gets sold every day. Entities like Facebook, Twitter or even consumer credit reporting agencies sell your name and mailing address to credit card companies and other companies that solicit you for your business. Credit card companies often purchase names and addresses of thousands of consumers at any given time and send them a pre-approved credit offer, regardless of whether or not they qualify.
Read the fine print
With every contract you are ever presented with, the fine print tells you everything you need to know. Ignore the big, bold letters at the top of the offer that promise you zero percent APR or mouthwatering terms. Instead, pay attention to the bottom paragraph on the offer, with the tiny print that discloses the offer is only available to those with acceptable credit.
Of course, that doesn’t mean that all hopes for a credit card are dashed with a pre-approved offer. In fact, it is not uncommon for the credit card company to issue another card with less favorable terms if your credit isn’t on par with the terms of the “pre-approved” offer.
So why do they say you are pre-approved?
For lack of a better explanation, pre-approved offers are a way for credit card companies to “fish” for new clients. They cast a wide net, sending out a mass mailing, hoping to catch credit qualified consumers. Once you take the bait, they reel you in with accepting whatever card they ultimately decide to give you.
The law prohibits card issuers to pull your credit history without your authorization; something that they simply do not have unless you sign the application that goes along with the offer, or fill out the offer online. Therefore, there is no way for you to be truly “pre-approved” for any credit offer, simply because the card issuer has no way of validating your credit history prior to your completion of the pre-approved offer application. Instead of filling out every pre-approval that comes your way, be smart about your finances and review credit card terms and offers online, comparison-shopping for the best rates and terms; and take those pre-approved offers through the shredder.