credit card advice
Many Americans open their mailboxes every day to find direct mail pieces informing them they are approved for certain credit cards.
These preapproved credit card offers, also known as prescreened offers, usually feature specials meant to entice you, such as bonus airline miles or an introductory 0% APR.
Even though it’s easy to compare and apply for credit cards online, credit card issuers are sending more offers than ever directly to your doorstep.
According to MarketWatch.com, there was a large increase in credit card offers in 2013. In fact, “Direct-mail pitches increased by 18.5 percent in the first quarter of 2013 over the previous quarter, according to the Mintel Group.”
What are preapproved offers?
These are unsolicited credit card offers sent to consumers based on certain criteria, such as credit scores.
When you receive one, there is usually a special offer and instructions for applying. They are not the result of you initiating activity. They are from a credit card company that wants to market to you and hopes to get your business.
Why do you receive them?
When credit card or insurance companies want to market to consumers, the Fair Credit Reporting Act (FCRA) permits them to obtain lists of people from consumer credit reporting companies, such as Experian or TransUnion.
They can narrow it down by certain criteria, such as credit scores, though your credit score does not receive a hard inquiry. This is a very good thing, as credit inquiries can harm your credit.
The credit card companies mail them directly to your house in hopes you will then apply.
Approval not guaranteed
Because your credit report does not receive a hard inquiry before you receive this offer, the credit card company’s information on you and your credit history is limited.
Their goal is to send the card offers to people who will potentially qualify, but receiving an offer does not guarantee you will be approved.
You still have to apply and receive a credit check. It is not uncommon for consumers to be denied or even receive a card with a higher APR if the credit card company doesn’t believe they actually qualify after pulling the credit report.
Every hard inquiry you receive can negatively impact your credit, so be careful not to apply for these offers too frequently, especially if you are often denied.
“You have the
right to opt out.”
How to dispose of them
If you receive an offer you don’t want, do not simply discard it in your trash can. Be sure to shred it or rip it up so someone with bad intentions (such as an identity thief) won’t be able to apply in your name.
Putting an end to offers
Some people may like receiving credit card offers, but many would rather not receive them.
Fortunately, while the FCRA allows companies to send you these offers, it also gives you the right to opt out of receiving them. Doing so prevents the credit reporting companies from giving your information when credit card companies are sending out offers.
Rest assured there are no negative repercussions from opting out.
According to the Federal Trade Commission, “Removing your name from prescreened lists has no effect on your ability to apply for or obtain credit or insurance.”
Your first option is to opt out for five years. To do this, call 1-888-5OPTOUT (1–888–567–8688) or visit www.optoutprescreen.com.
You can also opt out permanently on www.optoutprescreen.com, though it requires an extra step of submitting paperwork via mail. If you later decide to opt back in, you can visit the same website and submit a request to begin receiving offers again.
Note that you may still receive offers for companies you do businesses with or services that don’t have a preapproval process.