Dos AND Dont’s OF A PRE-APPROVED CREDIT CARD

Instant credit cards have become the order of the day.  Some of the Private Sector banks have come out with Pre-approved credit cards.

Salient Features:

1. Customers have an option to avail virtual instant credit cards within no time after it is authenticated.
2. Customers can then link this bank’s application at make payments at POS terminals immediately after the virtual card is generated.
3. This has enabled the customers to
   1. Get an instant credit card and
   2. Make payment at retail outlets without any problem.
4. This sort of reach to the customers who are pre-approved is more or less extended by several of the Private Sector Banks today.

Customers Beware of:

• Offers received via e-mail for a pre-approved credit card is indeed a welcoming feature. Companies in order to lure a customer would offer them a card bearing low interest.  This is practically impossible since under stiff competition in the market, the card charges of banks normally amount to 35-40 percent minimum.
• Simply receiving the offer to receive the credit card does not entitle a customer to receive the Card on the face of it.
• It is necessary that the customer should be within the stipulated CIBIL Score, which the bank thoroughly checks before its extending this facility.
• Incidentally, after you apply for a Credit Card, the bank will make the second round of due-diligence to ensure that your creditworthiness is well within the set score to offer a card.
• If your credit worthiness is risky, the request for a card will be summarily rejected which could reduce your CIBIL score temporarily.
• After successfully passing through the screening process, companies attract the customers, by saying that the cards will be “LIFETIME FREE “and no charges will be levied.
• This is a trapping method, and the fact is that the initial period charge on the card is waived off and this again varies from bank to bank.
• When the customer holds multiple cards the trouble further aggravates when there are bills outstanding on the other cards. The card issuer may ask for an upfront fee before issuing the card.

Conclusion:

1. If the existing credit card is not offering you better schemes and rewards it is better to apply for a pre-approved credit card.
2. The pre-approved credit cards are best suited if your CIBIL is very good.
3. It is not advisable to apply for a pre-approved credit card if one looks up only for the reward points.
4. One should go for a pre-approved if really it is required since an idle card not used, will only bring down the credit card history.
5. Hence, go for a Pre-approved Credit Card only
   1. After scrutinizing it properly
   2. After going through its terms and conditions and
   3. Most importantly, only when you really require it.