Preapproved credit cards?

Question

What does a preapproved credit card offer actually mean? Is it ever a good idea to use one to transfer a balance to from another card? If not, what would be a good idea? I am working hard to pay off a balance, but do NOT like the high interest rate of my current card and really want a better rate! Thank you for your answer.

Answer 1

I work in a bank and take my word for it, when it comes to credit card offers in the mail, you are never preapproved.  See, they can't legally inquire on your credit without your application so how can they really pre-approve you?  They still pull your credit to verify their risk factor in extending you a line of credit.  You can still very well be declined from these pre-approved credit card offers.

Transfering high interest cards over to newer credit cards that have introduction or promotional rates is a good idea in my opinion.  When you apply for the card, they will hit your credit report with a point just for the inquiry.  Too many inquiries does look bad on a credit report.  However, if approved, these introductory rates are usually low enough that you should find it much much easier to make some real gains on decreasing your overall debt thus slowly improving your credit over time.  It's called debt to income and the less debt versus your income the more likely you are to get approved for credit/financing in the future and better interest rates.  What you do want to look out for is annual fees.  A low interest is great but hefty fees make it a mute point.  Also, make sure you have a general idea of what the interest will range from after the introduction rate is over.  You don't want to bounce from credit card to credit because each one will hit your credit again and these inquiries do take years to fall off.

I hope this helps and good luck!!

Answer 2

Preapproved credit card offers simply mean they have reviewed your credit history and find you a reasonable customer for their card.  They haven't reviewed your credit history individually, of course, just that you fit certain parameters that caused their algorithms to pop your name onto their list.  And, if you "apply" for their credit card, (sign up) you will be assured of getting one.  Welcome to a club a bazillion other people belong to.  They make it sound special, but it's not.  So much for the cynical part.  If you review their Ts&Cs (terms and conditions) and in fact, their interest rate is lower than what you are now paying, that you can transfer without additional cost the balance from your current card to the other, it might make sense to do it.  Changing to a credit card that offers lower interest is a sound financial move.  The "preapproved" stuff is just advertising.

Answer 3

Pre approved doesn't really mean much these days. It's just like with mortgages, pre-approved simply means if you have decent credit and a job at the time of application you might get a card.

The card companies criteria can change at anytime. So by the time you apply, maybe you're credit score or income isn't quite sufficient to get approved.

Pre-approval is an assumption. Pre-qualified means you've alread been checked out and given the thumbs up.