Finance Fundamentals

It’s Not Really The Credit Card That You’re Pre-Qualified For

Stef Donev

The next time you get a letter from Visa or and telling you just how wonderful their MasterCard announcing that you are already pre-qualified, special gold or platinum or zirconium credit cards are, and about their low, low Annual Percentage Rate of interest (APR), believe them.
You are pre-qualified to go through a credit check.
If you pass that credit check you’ll actually get that card, and then be able to take part in one of America’s most popular and fastest-growing sports credit surfing.
But there are a few important things to know before you grab your plastic and shout:
First, we’ll look at “Surfs Up!” what to do with it if you do get it. actually getting that card you’ve been “pre-approved” for, and then we’ll look at It is important to understand that millions of people get the same letters. While some of them do have AAA credit ratings, some couldn’t qualify for a loan to make a local phone call. As further proof of just how carefully these lists are scrutinized, take note of the fact that some letters also go to people in prison and folks long dead.
“They are shopping you,” explains Rick Swartz, Bakersfield, CA. a counselor with Kern County Credit Consultants, in
“it is against the federal law for anyone All they really know about your credit history is that you have one. That’s all they can know because to obtain your personal credit history without your authorization,” he adds.
What credit card companies do is go to credit reporting services, such as Experion or Trans Union Credit Bureau, and buy their mailing list just the names and addresses. That’s all the company is allowed to sell. All the credit card companies know is that every name on the list has a credit file and a credit history. “They just don’t know if it’s good or bad yet. It’s called top-of-the-line inquiry.”
You fill out the form, sign it and send it back. What this does is authorize them to run your credit report, and authorizes the credit reporting company to open up their files on you.
“This is a bottom-of-the-line inquiry,” Swartz explains. If your credit history is bad, or if it’s good but just not good enough, “the next letter you receive is a ‘statement of denial’ indicating: ‘Sorry. No can do.”‘
If you are turned down they are required to tell you why, and also to tell you what credit reporting service they got their information from. You are then entitled, by law, to call that credit reporting company up and get a free copy of your credit history. If you find anything on the credit history that is wrong, you can then deal with the credit reporting agency to have it corrected.
Getting turned down doesn’t always mean you have bad credit. There are other reasons.
Some people are turned down because they don’t use enough credit. Credit card companies don’t like to give credit cards to people who won’t use them. They don’t make any money that way.
Other people have a good credit history, but just don’t make enough money. Some credit card companies are targeting people with a family income of more than $50,000. Some $75,000 and others are aimed at like those making with people who make less than that. people who bring in $100,000 or more. They don’t want to deal
The most attractive thing about any of these cards is their low APR. To make it even more appealing, they will usually let you transfer your debts from other credit cards; cards that 19 or 20 percent or more. are charging you 18 or
“It’s a teaser rate,’ Swartz explains, and you’d better read every bit of information in the box with all when the introductory offer is over the rate jumps up to 18 or 19 or 20 the small print. That’s where you learn that the 3.2 or 2.9 APR is only good for a few months, and that percent or more.
Swartz cautions that “the lower the teaser rate, the shorter the period it is offered.” have you using their card at their standard APR.
The credit card companies are working on the assumption that when the teaser rate is over they will them from other credit cards. They’ll also have any other debt you transferred to They are in business to lend you money, and the more money they loan you, the more they make.
If you do transfer funds from a “is to accelerate the payments while you are within that credit card with a higher interest rate, your objective, Swartz explains, teaser rate.”
Once the APR switches back to the company’s standard double-digit APR, the interest will start adding up and then it will start compounding unpaid balance, including any unpaid interest. every month. You wind up paying that interest on the It’s like getting a new loan every month, a loan you have been pre-approved to pay for.
But if you keep your credit history spotless, when the APR jumps, Swartz says you just might be able you can surf their teaser rate on to the next to abandon ship, and surf over to the next credit card company offering a low, low teaser APR. Then, good deal.

This article was written by Stef Donev

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