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The Hidden Reality of Pre-Approved Credit Cards

Customer acquisition for credit card providers has become more like a rat race where the smallest opportunities to gain a customers are not left untouched. Pre-approved credit cards is one such opportunity. If you check every mail that you receive in your mailbox online, you will find it loaded with at least two to three offers of such credit cards with 3-4 banks at a minimum. Almost, everyone receives these offers. But what is it that needs to be done with these offers. Do we outrightly reject them or go for it. There is another road routes in between the hasty decisions of acceptance and rejection and that is knowledge and research.

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Be Doubtful, Not Debtful

It is vital to know the product first, its shortcomings and what it can do for you in the long run. Credit cards are made so easily available today that it often makes one wonder whether addiction to shop with the plastic card is more addictive that other narcotic addictions. The truth is that perhaps in the fact that any extremely advantageous product has some backside that is capable of leaving us in the ditch if misused. so hold on there, before you get yourself one these pre-approved credit cards and know more about them.

What is Pre-Approved Credit Card

The credit card provider or bank will offer you something called the pre approved credit card. This does not mean that you will receive it. In reality it means that the credit card company or bank has been through databases of CIBIL scores and range of people eligible for a credit card. Hence, an automatic mailer has been sent to the people with such satisfactory CIBIL scores as a bait to fish you out as a customer with a pretty worm called pre approved credit card. If you go for it, the bank or credit card company will conduct a second round of assessment of your credit history, if they do not find it up to the mark, your application may be rejected also possibly bringing down your CIBIL score with a credit card application rejection. So, it is a two step back if your application is rejected.

How Can Pre-Approved Credit Offers Be Further Hazard

Here is why to think twice before applying for them even if you have a considerably satisfactory CIBIL score:

  • Issuers and banks offering low interest rates and lifetime free cards are often marketing gimmicks to trap people in what appears as ‘easy access to money’.
  • Annual fees being waived off for the time-being is quite different from what the offer free for lifetime means to a customer. But the temporary discount of no annual fee is not permanent. It's only up to the bank's discretion.
  • The annual percentage rate also rises to somewhere between 36% to 40%. The other interest rates being low makes no difference since all banks offer competitive rates, to stay ace in the rat race.
  • The other scams that preapproved credit cards may trap you into include:
    • Expiration dates coming to a close
    • Reluctance to give out terms and conditions
    • Lack of contact information
    • High upfront payments for prior receiving the card

When to Say Yes?

However, there are indeed upsides and advantages of credit cards and pre-approved credit cards. this includes:

  • If you are not satisfied with your current credit card in the form of cashback and rewards and at the same time you are paying the bills on time for it. these credit cards may be useful if the rewards and and other benefits are worth it. But a lot of research is necessary.
  • Pre-approved credit cards are extremely useful for people who have considerably good CIBIL scores. But if you want a second credit card for any reason, other than escaping your debt on your current credit card. these offers may be useful in the long-run and worth the application.

Hence, it is important to note two things to even consider, replying back to these offer mailers: your current standing in credit and credit score and the reliability of the credit card offer and positioning. So, go for it with due diligence.

FAQS on The Hidden Reality of Pre-Approved Credit Cards

  1. When should I opt for a pre-approved credit card? 

    If you are not happy with the current credit card (cashback and rewards) and you are paying the bills on time, a pre-approved credit card will be useful for you.

  2. Can credit card issuers offer low interest cards as a scam?

    Yes, issuers and banks can offer low interest rates and lifetime free cards as marketing gimmicks to trap people and these may see, as ‘easy access to money’ and many people tend to apply for them.

  3. What are the other scams that we can fall for as customers? 
    • Reluctance to reveal terms and conditions
    • No contact information
    • High upfront payments

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