With the kind of financial situation the country is going through, it has become increasingly difficult to obtain a credit card without verifying an individual's credit history. So don't be excited if you receive an offer of a pre-approved credit card. Also called pre-qualified credit cards, it means that you may be a potential customer and a preliminary screening of your credit history has been done by the credit card companies.
Mostly, you would tend to jump at the idea of a pre-approved credit card, which offers you the chance of improving your credit, but wait a minute. Go through the terms and conditions offered and look around for other companies who may be willing to give you a better deal.
Under usual circumstances, you may have applied for a credit card by filling up a form. You may have been denied a credit card, maybe for a bad credit, or because of no credit history. The company knowing this sends you an offer of a pre-approved credit card. Depending on your credit history, these cards may be unsecured or secured.
Pre-approved Credit Cards for Bad Credit
In case you have a bad credit history, your credit card company would offer you a secured pre-approved credit card. This means that you need to pay a deposit. Moreover, the credit limit offered would mostly be equal to the amount of security money you deposit. Usually the card company would need you to deposit anywhere between $250 to $1500, which would depend on the kind of scheme you apply for.
If you are applying for a bad credit pre-approved credit card, the rates of interest would be high and the offers and rewards associated would be nil. If this is the case, don't be disheartened, these offers would follow once you have repaired your credit. Remember that your first priority is credit repair, and this type of a credit card offers the best chance to get on the good books of financial institutions. Before accepting an offer, check the credentials of the company and if it is a valid offer.
Pre-approved Students Credit Cards
If you are a student and get an offer for a pre-approved student credit card, make sure that you research around for the best deals available before taking a decision:
- Look for companies which offer low rates of interest. A good offer would be around 15% to start with. However, if a parent with an excellent credit history offers to sign as a collateral, the rate of interest would be less than that.
- Make sure that the credit limit offered by the banks is within manageable limits. They should only be used in case of emergencies.
- See to it that the grace period offered by the companies is about 20 days.
- The best offers of student credit cards have the option of managing your account online. This facility helps you to keep a track of the amount you spend, besides keeping a constant watch on the credit limit.
Getting a credit card and using it responsibly can ensure that you have an excellent credit score which would help you in future while applying for a loan.
Stop Pre-approved Credit Cards
If you are fed up with the number of pre-approved credit card application forms in your mailbox, then you can stop them by just saying no. You need to call the toll free number of the credit bureau, where your personal details like Social Security number, your name and home telephone number would be asked. The information collected would be kept confidential and is only used for processing your request. Moreover, you can also ask them not to share your information for promotional purposes.
When you get one, make sure that you use it judiciously and improve your credit ratings. It's a great opportunity to build up your credit. Online application has made credit card processing faster. So go ahead and buy a credit card, but make sure you always have your credit score in mind.