As is the case with most Americans, hardly a week goes by where I don’t receive a credit card solicitation in the mail – whether it’s a new “pre-approved” credit card application, or a balance transfer offer for a card I already have. And just like most people, I almost always toss these into the trash.
However if you ever entertain these credit card solicitations, there are a few things you should know about. Many of these apply not only to solicitations via mail, but online credit card deals as well:
1. There’s no such thing as pre approved credit cards
Many assume that a pre approved credit card application means they are already approved for the offer… it’s simply a matter of whether or not you want to accept it. However that’s not the way they work.
There is no such thing as “pre approved” offers when it comes to credit cards – you are either approved or denied and that decision is not made until after you submit your application. The “pre” part simply refers to your status before you submit your application… as in, you are not approved, you are “before” approved! Pretty sneaky of them, huh? If you want a more detailed explanation, here is an article I wrote about the pre approved credit cards gimmick.
2. The best balance transfer offers are often negotiated
We all get offers in the mail for our existing credit cards, saying things like “0% interest until December 2011.” If you pay close attention to these offers, you’ll notice they usually aren’t quite as good as what new card members get. For example, Bank of America sends me offers that give only 9 months interest free, but they give new applicants for my same card an interest-free period that is several months longer. This is totally unfair, but there’s something you can do about it…
Call up your credit card customer service and tell them you got a balance transfer offer in the mail that gives 0% for 9 months, but instead you are thinking about signing up for a new card instead because it gives 0% for 15 months. Ask them to match it, otherwise you are switching to a new card. The phone reps in the balance transfer departments have the ability to modify the offer, and because they are usually paid commissions on transfers, it’s always in their best interest to try and seal the deal. Here is a forum thread about negotiating credit card interest rates.
3. Watch out for “up to” and similar wording
This applies to both offline and online credit card offers… make sure you look for phrases like “up to” on the advertisement.
For example, Citi recently ran an offer that gave 0% balance transfers for up to 21 months, but in the fine print it said that only those with qualifying credit (translation: perfect credit) are given the offer for 21 months. Other tiers of credit are given lower periods of time for no interest. The worst part about deals like this is that there is no way to know what credit tier you will fall under, until after your application has been submitted and approved.
Also, you should apply this same scrutiny to rewards programs. When they say up to 1% cash back, what exactly does that mean? Make sure you review the application carefully, as that could mean you have to reach a certain spending tier in order to earn the 1%.
This guest post was written by Michael from Credit Card Forum