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Those Preapproved Credit Cards

Preapproved credit cards aquired a bad reputation over the last couple of decades because they turned out to give many shady third party companies an excuse to exploit the naivete of consumers by making offers which were far different from the actual services provided.

A number of companies would bait unsuspecting consumers with promises of securing credit cards regardless of past credit history. Consumers would sometimes have to call 1-900... phone numbers which result in high per minute phone charges. It would turn out that these companies would then send the customer a list of banks issuing secured credit cards or else those issuing unsecured credit cards to higher risk consumers. Alternatively, they would be the banks themselves who would then go through the credit screening process before deciding whether or not to approve a prospective credit card account. But his did not guarantee that one would receive a card and it is hardly the type of service that any capable person would not be able to perform for themselves.

Very often, cards with low acceptance requirements come at a very high cost. Unusually high interest rates are common and there are generally a number of fees and charges just to obtain the account. These may run as high as $100 and does not include annual membership fees and various transaction fees which may also be tagged on. For desperate consumers who may be trying to re-establish their credit, they seem the only option. However, it may be better to find a reasonable secured credit card offer which achieves the same purpose. In addition, your initial deposit for a secured credit card is refundable and usually accrues interest as well.

Federal law has since tightened the rules so that companies must now issue credit as stated by the terms of the advertising they engage in. "Preapproved" means exactly that, and companies must now deliver exactly what their advertising states. Of course, this has meant that credit card companies must now be much more careful whom they solicit for preapproved cards. Naturally, they are interested in high income demographics: college educated professionals and homeowners.

How do the credit card companies find such consumers ? It's easier than one would think, particularly in the age of the Internet. Mailing lists are an obvious avenue. There are thousands upon thousands of highly specialized targeted lists created by other companies which sell these to credit card companies for a price. Although a number of companies, particularly on the Web, make a lot of noise about their privacy standards, it has become clear that a number of them collect information on their site visitors which is sold to other companies. Whenever you submit information about yourself to a website, the site has the capability of using that information to its own ends. In the case of reputable companies, this is not a significant worry, but in the case of generic and less accountable companies, it is something to be concerned about. Do not give information about yourself unless you have to or unless you don't mind receiving such solicitations.

Credit card companies also use subscriber lists of magazines to target certain types of consumers. Those who subscribe to technical, financial and professional periodicals are a much desired demographic for credit card companies. Of course, if you want to establish a credit history or to receive preapproved and other credit card offers, this is a way to get yourself on some list somewhere.

Being a college student almost guarantees that you will receive a number of such offers even if you have no credit history. If you are in college, it is a good idea to establish a good credit history by obtaining a student credit card, using it sparingly and making all your payments on time and in full.


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