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Pre Approved Credit Cards not always the way to go

Updated on July 17, 2011

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!


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    • profile image

      Darrell Dawson 6 years ago

      Thanks for the tips about credit repair on this particular site. The thing I would tell people should be to give up the actual mentality that they can buy now and pay out later. As a society many of us tend to do this for many things. This includes trips, furniture, as well as items we'd like. However, it is advisable to separate your wants out of the needs. If you are working to raise your credit ranking score actually you need some trade-offs. For example you possibly can shop online to save money or you can click on second hand merchants instead of high priced department stores pertaining to clothing.

    • Sweetsusieg profile image

      Sweetsusieg 7 years ago from Michigan

      Absolutely!! Yeah, we did that once, had a bill before spending any money!! Not cool!

      Thanks for stopping by!

    • JillKostow profile image

      Jill Kostowskie 7 years ago from Pennsylvania

      Excellent advice, and well written. I totally agree that if you have to pay to have the credit card, why bother. By the time you activate those dumb cards you can only spend $30 me that is not enough to cover an emergency situation! It is just a well devised plan to get you to spend over the credit limit so they can steal your money quicker!!!

    • Sweetsusieg profile image

      Sweetsusieg 7 years ago from Michigan

      I am now! LOL, If you didn't guess I learned the hard way it's got to be "cash all the way"... or "if it's meant to be no credit for me!"... or some other cool ditty I can't think of right now.. LOL

      Thanks for stopping by!

    • Dusty Snoke profile image

      Dusty Snoke 7 years ago from Chattanooga, TN

      great hub. I am a firm believer in staying away from the credit cards.

    • Sweetsusieg profile image

      Sweetsusieg 7 years ago from Michigan

      I remember hearing about that! I should have put in about paying only the minimum balance too!! That was what the big draw was for college kids, they could use $100 but only have to pay back $15... By the time they graduated not only were they deep in debt with student loans, but also credit cards!!!

      Thanks for stopping by!

    • esatchel profile image

      PDGreenwell 7 years ago from Kentucky

      Great advice to stay away from the cards. Alot of us have had to lern the hard way. I remember back in college - they gave those things away like candy to students, who promptly got into financial trouble! Ann

    • Sweetsusieg profile image

      Sweetsusieg 7 years ago from Michigan

      drbj - HSN - YAY!!! Everyone needs one of those thing-a-ma-jigs! You know a picture of a horse that looks like a butterfly... I think one of those shopping channels has their own darned credit card too!! I'm so glad that I'm not into girl stuff like clothes, shoes, make-up etc... I do like white gold w/diamonds, even though I won't buy my own... But it must be real or I turn green...

      Hypnotherapy-Guru - Dad always warned me, but since he never got into trouble he couldn't warn me this way. I guess only one who has gotten in this type of trouble knows.. LOL

      Thank you both for stopping by and commenting!

    • Hypnotherapy-Guru profile image

      Hypnotherapy-Guru 7 years ago from Idaho

      Great hub! I got into a lot of credit card debt when I was younger. I wish someone would have explained it all to me a little better. Thanks!

    • drbj profile image

      drbj and sherry 7 years ago from south Florida

      Some folks will never get out of debt, susie, because one of their greatest pleasures is watching Home Shopping Network or the other TV shopping channels with a credit card in their hand.

    • Sweetsusieg profile image

      Sweetsusieg 7 years ago from Michigan

      My folks always had credit cards, but each month that the card was used it was paid off. With 5 kids there was never enough to pay it off.. We should have never fallen into that trap. We are still digging our way out, and paying the price.

      I have always felt that 'cash only' was the best, unless of course it's for house or car. With both, a sizable down payment should be used to lower payments AND interest.

      Thanks for stopping by and commenting!

    • Dave Mathews profile image

      Dave Mathews 7 years ago from NORTH YORK,ONTARIO,CANADA

      Sweetsusieg: I have used cash. I now use my Debitcard, but I hate credit cards. My dad taught me two things about finance.

      If you have to ask the price for something, you probably can't afford it and don't need it.

      If you don't have the cash to pay for something don't get it.

      Of course there is an exception to this rule if you are buying a house, or a car or any big ticket item.

    • Sweetsusieg profile image

      Sweetsusieg 7 years ago from Michigan

      Thanks! Can you tell.. I've been here before? Oh boy have I!!!

    • LillyGrillzit profile image

      Lori J Latimer 7 years ago from The River Valley, Arkansas

      Way to go Sweetsusieg, Good Luck. Excellent Hub.