As banks try to outdo each other in terms of customer acquisition, it is only natural that average individualslike you and I receive numerous emails every week that talk about pre-approved credit cards. You may be wondering how to react when you receive these offers and whether you should simply ignore such mailers outright. Before you make your final decision, it is advisable that you do a bit of research. Find out more about the pre-approved credit cards in the following sections so that you can make an informed decision in the matter.
Ascertain the meaning of the term “pre-approved”
When you receive anemail which offers a pre-approved credit card, firstly ask yourself do you really need the new card. Moreover, in most cases, these emails are mass mailersthusmake sure you do your due diligence and confirm with the card issuer before goingfor such an option. On the other hand, if you receive a call from the card issuer itself, it is a legitimate enquiry from the card issuer regarding if you are interested in a new card. In case you receive a call regarding “pre-approval” for a credit card, you can definitely go ahead with the option. This is because, as part of the pre-approval process, the card issuer has already performed a check regarding your payment history and other eligibility criteria for the card. In case you receive telephonic confirmation of your preapproval, in most cases, minimal or no additional documentation is required. However, in order to be on the safer side, it is always best practice to check and compare all available credit card options before settling on a specific one.
Understand the Card Issuer’s Terms and Conditions
The primary aim of the marketing department of card issuers is to issue new credit cards to customers by telling them that they are being offered credit cards at a low rate of interest or with unmatchedfeatures, etc. But as a discerning customer you should be aware that not of these are true. As all players have to remain competitive the question of low interest rate and special offers on a card is in fact moot. Do not trust an agent if they are reluctant to spell out the terms and conditionsrelated to you card or ask for upfront payments prior to issuing the card.
Impact on Credit Score
When a bank offers you pre-approved credit cards, it means that the bank has been through its internal database and narrowed down on the people who are eligible for the card based on their previous business with the bank. If you are one of them, you too would have received an automated system generated mail. If you decide to opt for the pre-approved credit card, the bank will conduct a second round of assessment and evaluate your credit history by pulling a copy of your credit report from CIBIL TransUnion, Equifax or Experian. If the bank discovers that your credit history is not up to the mark it may reject your application which in turn will have an adverse impact on your CIBIL score.
Check the fine print
Before you choose to avail a pre-approved credit card read the fine print i.e. the terms and conditions carefully. In case you do not understand something make sure you ask the relevant department of your prospective card issuer for clarification. One of the key things to look out for is the qualifying criteria such as minimum amount to be spent using the card within a specified time, the minimum monthly salary range for the card user to get a specific benefit of the card, etc. In case you do not fall into the qualifying criteria as specified by the card issuer, you might not get the expected benefit of the credit card.
To sum up, getting “pre-approval” for a new credit card is not necessarily a bad thing; however, it is always best practice to consider all available options before zeroing in on a specific credit card that suits your unique requirements.