There is a specific category of credit cards that you can benefit from but have not applied for. These cards, called pre-approved credit cards, are offered by banks to individuals who meet a set of financial conditions fixed by the bank.
What are pre-approved credit cards, and how do they work?
A pre-approved credit card is a credit card for which customers don’t apply but get selected. The bank or credit card company in question – depending on the customer’s relationship with the institution and their creditworthiness – offers a pre-approved credit card to the customer. Banks and credit card companies have their customers’ credit history-related information and they use it to shortlist a few customers for these cards.
Key features of pre-approved credit cards that you must know
If you have been selected for any bank’s pre-approved credit card, you must know these key points about these cards –
- If the bank rejects your credit card application, your credit score is negatively impacted: It is true that you don’t “apply” for a pre-approved credit card like any other credit card. However, if the bank offers you one and you decide to opt for it, you must fill an application form to avail the card. If your application gets rejected during this process, your creditworthiness could be negatively impacted.
- Lifetime and interest-free pre-approved credit cards offer time-bound benefits: The rewards offered by these cards are bound by several rules. These rules are mentioned in the credit card agreement shared by the bank. Lifetime-free credit cards offer a temporary discount on the annual fee.
- Pre-approved credit cards have an expiry date: Remember that you can only apply for a pre-approved credit card during a limited period. You must apply during that period and provide all the required information to the bank.
Benefits of pre-approved credit cards
The following are the key benefits of choosing pre-approved credit cards –
- You receive sign-in bonuses and rewards: Banks offer perks like rewards, cashback offers and sign-in bonuses through their pre-approved credit cards.
- The application procedure is very convenient: You can use a mobile banking app to complete the entire procedure online.
- You can improve your creditworthiness by effectively using a pre-approved credit card: A pre-approved credit card, if used efficiently, can help you significantly improve your credit score.
- You can benefit from competitive interest rates: Banks generally offer high interest rates to customers through their pre-approved credit cards.
How to apply for pre-approved credit cards?
If you receive an email or a phone call from a bank saying that you have been selected for a pre-approved credit card, you must complete the application procedure specified by the bank by providing the required documents and submitting the application form.
In conclusion, pre-approved credit cards can help you improve your credit score, benefit from high interest rates, and avail attractive rewards and cashback offers. Be sure to check all the features offered by a bank or financial institution’s pre-approved credit card before applying for it.
