The more up-to-date consumer no longer views a wallet bristling with credit cards as a status symbol. While having an extra line of credit for emergencies never hurts, more cards just means more interest to pay and can be the precursor of living beyond your means. So when you get one of these offers in the mail, should you jump at it? Well, that depends on your situation. Let’s take a look.
If you don’t have any credit cards, your credit history is probably pretty thin. Credit card companies want to get you started on the ‘debt-go-round’, so if you don’t have any bad marks on your credit report, you’re likely to receive such an offer. If your credit rating is poor, you too will be approached with these offers.
Pre-approved credit cards coming through the mail means the issuing company has already checked your credit, decided on the amount of credit they’re willing to offer and the APR. The application is usually quite brief, requiring only your name, SSN, employer, bank information and a contact number – and, of course, your signature. The issuing company tries to make applying and taking them up on their offer as easy as pie. You have been pre-screened and they’re anxious to start collecting some interest from a reasonably good risk, you!
If in doubt about the veracity of the offer, check out the local Better Business Bureau and see if there have been any complaints. Also, ask your local bank branch manager, what is the easiest credit card to get these days. He should be able to steer you to the right card issuers.
To be on the safe side, you may want to do an online search for the company extending the offer. Do they have a website? If so, next conduct a search with the company name in quotes (e.g. “ABC Company”), followed by the word, scams. If they have a bad reputation, you’ll soon find out.
Should you choose to apply, it’s smart to give the company a call and see if you can find out your pre-approved credit card’s limit and APR. While they may be reluctant to give this info to you over the phone, it doesn’t hurt to ask. If you have no credit to speak of and you’re offered a $300 line of credit with an APR of 14%, it may be just what you need to begin building a good credit history. On the other hand, with a bad credit rating, the same credit limit may come with a 25% APR, which is not such a great deal.
As with any credit card offer, carefully read the fine print on your pre-approved credit card’s reverse side of the application. Yes, put on your glasses if you need to … the devil is, indeed, in the details.
