Do Preapproved Credit Cards Really Exist?
The short answer to the title of this article, do preapproved credit cards really exist, is yes. That yes, however, comes with a qualifier. Only certain types of credit cards are in fact preapproved. Unsecured cards are absolutely not. If any one should offer you an unsecured card that they claim is guaranteed to be approved then you know it’s a scam.
And here’s why that is. No bank or financial institution in their right mind, unless they’re trying to go out of business, will give unsecured credit to anyone that they do not thoroughly check out in advance to see if they are in fact creditworthy. Never before has that been so true is it is now.
Banks and financial institutions have been hit hard by record credit card defaults over the past couple of years. The poor economy has wreaked havoc on their bottom lines and they can ill afford to set themselves up in a position where they are vulnerable to more defaults.
Some are teetering on the brink of survival as I write this. Remember how many financial institutions took billions of dollars of taxpayer bailout money? The reason they needed it was in no small part because of the poor judgment they showed in granting credit to unqualified borrowers for both credit cards and subprime mortgages. They thought it was easy money, and it was at first… until it all blew up in their faces.
Preapproved Credit Cards
Having said that, there are in fact preapproved credit cards in the form of secured credit cards. These offers are usually sent to people that have moderate to severe credit problems. The advantage of using these cards is that it gives these consumers the chance to repair their credit ratings.
Having a strong credit rating opens the door to getting favorable interest rates on such things as auto loans, mortgages and credit cards (in some cases anyway). While it is true that credit is very tight right now, it won’t stay like that forever and in order to be approved for any of the forms of credit that I just mentioned consumers will have to have at least a good to excellent credit history to stand behind.
Typically the credit markets and the unemployment rate have had an inverse relationship. When the unemployment rate is low credit is rather easy to get because people are working and spending money. When the unemployment rate is high like it has been… well people that don’t work can’t pay their bills.
So the bottom line is that yes indeed, there absolutely are preapproved credit cards available on the market. They are however, designed for a specific need as we have pointed out here. If you should happen to believe that it may be beneficial to you to check out these types of offers further then by all means look into it. Just be very careful and do your homework so you know exactly what they entail.
Comments Off