“You’ve been pre-approved!” is stamped on the envelope of just about every credit card mailing. The letter and credit card application inside also say the same thing. But have you ever read the fine print?
Here’s the truth…
Pre approved credit cards are nothing more than a deceptive marketing gimmick…
There is no such thing as “pre” approval in the credit card industry. You are either approved or denied, there’s no in-between. However sending a letter in the mail that says “You might be approved” doesn’t sound very captivating, now does it?
So the industry came up with this term. In other words, it is not an approved credit card offer… if it was they would call it exactly that! Rather, it is “pre” (as in, not yet approved). In reality, everyone has “pre-approved” status unless they have already been “approved” for that credit card. It’s nothing but a word game to try and make you feel special for receiving the application.
Why was an offer sent to me?
Credit card companies purchase bulk mailing lists from marketing companies and credit bureaus of people they suspect who might be a good fit for the particular card they are peddling. They might be looking for consumers with a certain credit-score or income range, for example. The bank is merely guessing that you might fit the profile.
For example, let’s say you are subscribed to a magazine about yachting. That magazine sells their subscriber list to a marketing firm. Because that’s a sport typically associated with the wealthy, the firm classifies the people on that list as likely having a high income.
Then along comes a credit card company that wants to push their premium platinum card to high-income individuals. So they buy a list meeting that criteria from the firm to send their pre-approved card offers to. Many recipients will actually be a good fit, but there may be students subscribed to that magazine, non-citizens, and even people who have since passed away (which is why you frequently hear about pre-approved credit card applications being sent to dead people).
The bottom line is this…
Pre-approved credit cards are nothing but targeted junk mail. All they really mean is that the credit card company suspects you would probably be interested and qualify for the particular card they mailed you about.
Unfortunately many people fall for these pre-approved offers and assume it means they have actually been approved. In reality, the actual decision isn’t made until you submit your application and have your credit thoroughly evaluated… the exact same process that happens any other time you apply for a credit card. These offers do NOT mean you will get the card nor do they guarantee it!
Are guaranteed approval cards the same thing?
Credit cards that say they have guaranteed approval are something completely different. These are cards which are literally offered to everyone 18 or older. They truly are “guaranteed” as long as you agree to the terms… usually consisting of a hefty security deposit, extremely high fees, and a very small credit limit. The only people that would actually choose to apply for these types of cards are those recently out of bankruptcy or with really bad credit.
Ignore these marketing tricks and simply research and apply for the best credit cards suited for you, because the approval process is really just the same.