Pre Approved Credit Cards not always the way to go
You know you've done this!
Whoo-hoo!! It’s here! I’ve heard about these but never got one before! Hurry call the number before the offer expires, YEAH!! Let’s go shopping!!
Get out those magnifiying glasses!
Hold the phone! Put on the brakes! Read the fine print!!! Just because it says ‘Pre-Approved’ doesn’t mean you NEED it! The first one of these we got, we were pretty darned excited, someone was going to give us a credit card!! Because we didn’t the fine print we got ourselves deep into debt.
The fine print is somewhere, hidden in the information that is included with that BIG BOLD card. It is very small, you’re going to need Grandma’s glasses to see it. At the very least a magnifying glass. If you don’t have one of these, turn your drinking glass upside down over the words to read it! It is very important!
Who wants a bill when they haven't spent any money?
Why? Those credit cards that are pre-approved are most often very high fees. You get it and it says that you have a credit limit of $250.00, this would be great for most people who are learning to manage their credit and try to budget their money. The downside to these deals is in the fine print.
When you call to ‘activate’ the card you are automatically charged on the card a ‘one time fee’ of $89.00, then there is the yearly ‘subscription’ or ‘annual’ fee of $45.00 (fee’s vary), then there is the ‘payment protection fee’ after that there is probably another ‘fee’ by the time you are finished with the activation and ready to head out the door to go buy yourself a ‘little’ something, you have anywhere from $125.00 to $50.00 available balance left on your card. So as soon as you’ve punched in those credit card numbers with your social security numbers you are in debt.
Before the month is out, less than 30 days, depending on when you call, you will have a bill. Even if you’ve tucked this card away and haven’t spent a dime, you will have a bill. If you have activated this ’pre-approved’ card, you WILL have a bill.
Throw them away!!
These types of mail should be discarded as soon as they arrive. Do not even open them. Destroy it, shred it, give it to the dog as a chew toy, but get rid of it!!
Your Options
What is a person to do? The country seems to run on credit. You may need one for online purchases, car rentals, Hotel rentals. How do you get yours? There are several options open to you.
1. Pre-paid credit card - These are one option open to you. It’s kind of like a savings account that doesn’t draw interest. You pre-pay and have a credit card when needed. You can’t spend anymore than what you put on these cards.
2. Debit card - This is similar to a credit card in that it has a Visa or Master Card logo and it attached to your bank account. You can only spend what is in your account. Provided you have not signed the paper allowing you to go over your balance. That is an entirely different kettle of fish you don’t want to get into!
This card can be used for Hotels and Car Rentals as well, even if your paying in cash. It’s the ‘insurance’ that is needed, that says you are who you say you are to these companies. If you should destroy the items (car, hotel room) then your card will be charged.
3. Wait for the mail to arrive, look over each and every offer, reading the fine print, very carefully. If you do get a good offer, one that doesn’t charge you a ton of upfront fees, there will more than likely be a yearly subscription fee. If you wish to opt out of the payment protection that is entirely up to you. This is supposed to protect you in case you lose your job or something bad happens in your life. All I can say about that is ‘best of luck’ to you getting them to pay this.
The 'What could happen' scenario
If you should decide to get one of those pre-approved credit cards, tuck it away keep it ONLY for emergencies. If at all possible let the most responsible person in your home hang on to it.
If you MUST use your card at any given time, make sure you do not go over your credit limit. Most credit card companies have a high ‘over the credit limit’ fee’s ranging upward of $35.00. Then on top of the over the credit limit fee there is interest charged. The normal interest around 19% interest. This can add up fast!
If at all possible, pay off the entire charge either before or when the bill is due. Never EVER be late on any credit card payment. Even 1 day late will result in a late payment fee that will be added to you card, which if you are close to your credit limit could easily put you ‘over your credit limit’ thus resulting in another charge.
For instance you have a credit limit of $200 - you balance is at $185 - if you are 1 day late with your payment you will be assessed a $25 late fee. Now you balance is $210.00 which puts you in the ‘over the limit’ category and then will be assessed a $35 - 39 fee. So now your balance is $245 plus interest As you can see in an instant you can get in over your head and spend a very long time attempting to pay this off.
Pre-Pay all the Way!!
In this writers opinion - Pre-pay all the way! It’s the easiest way to stay out of debt and have a credit card.
Even if you save $5 or $10 per week to put toward your card, it really is the best way to go!
