Pre Approved Credit Cards - Be Careful!
Many credit card companies mail out offers for
Pre Approved Credit Cards by the ton. Chances are good that if
you have a bank account then you already get some of these in your
mailbox every single week, maybe even from the same lenders every
single week.
It is important to understand that pre-approval just means that
the bank or financial institution has found your name on a mailing
list next to some facet of credit underwriting they find moderately
desirable. Maybe you are in roughly the right income level. Maybe
you’ve had a savings account for a certain number of years, an auto
loan that you’ve been paying more or less on time, or maybe you are
a recent home buyer. None of this means the credit card company will
actually give you any of the pre approved credit cards if you
respond.
Bulk mail depends on volume to be profitable. Out of every bulk
mailing, if 3% of the mail sent provokes a response it is considered
a successful ad campaign. So these offers for pre approved credit
cards are sent out to lots of people. Reports have been made of dogs
and small children receiving these offers, as well as people who are
long deceased.
You can opt out of pre-approved credit card offers by going to
the website
https://www.optoutprescreen.com/?rf=t and following the
instructions there. Optoutprescreen.com is managed by the major
credit reporting agencies Experian, Equifax, and TransUnion.
You have a choice of opting out of the offers for five years by
filling out the form at the website and electronically submitting it
or you can opt out permanently by printing a form, filling it out,
signing it, and mailing it in. For people who want to receive these
offers and are not getting any, there is also an option to opt in.
A good article on the pitfalls of accepting pre-approved credit
card offer and specific things to watch out for is available at
http://www.foreignborn.com/self-help/credit_cards/5-precautions.htm.
In general, if you need or want a credit card or another credit
card, it is much better to shop around yourself and find one that
meets your needs instead of randomly accepting a pre-approved credit
card offer you get in a piece of junk mail.
Twice a year, the Federal Reserve publishes a list of the credit
card offers, terms, and conditions currently being offered by
various financial institutions and credit card companies. You can
view this list at
http://www.federalreserve.gov/pubs/shop/survey.htm
Look for a card with a low interest rate and no annual fee, and
read all the terms and conditions carefully before applying. If your
credit is less than ideal, watch out for application fees,
processing fees, and required credit insurance, which can end up
costing you more per year than the available credit on the card.
If you are attracted by perks such as frequent flyer miles, cash
back rewards, and points that you save for merchandise, make sure
hidden fees and/or a high interest rate isn’t off-setting the value
of these perks. Often frequent flyer credit cards have very high
interest rates compared to other cards.
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