What are Pre-Approved Credit Cards?
03 January, 2024
Credit Cards have become an indispensable tool for earning individuals who have multiple financial obligations to manage. Given the widespread usage of Credit Cards, there are many Credit Card companies in the market. To survive the cutthroat competition, Credit Card issuers launch attractive offers, which they typically market on their websites. Sometimes, you may even receive emails and phone calls from Credit Card companies stating that you are pre-approved for a Credit Card? But how can you receive approval without applying for a Credit Card and what do pre-approved Credit Cards mean? If these questions have crossed your mind, this article is for you.
What are Pre-approved Credit Cards?
Pre-approved Credit Cards are essentially invitations from banks or Credit Card companies, wherein you are approved for a Credit Card without having applied for one. The card issuer, typically the bank with which you have an existing financial relationship, may deem you eligible for a Credit Card due to certain specific, financial factors. To entice you to become their customer instead of choosing a competitor, they may pre-approve you for a Credit Card.
Typically, Credit Card companies have access to your credit score, based on which they check if you are eligible for pre-approved Credit Cards. After you receive the mail stating that you are qualified for a pre-approved Credit Card, you still have to complete application process like other applicants and wait for approval. Thus, even though you may be pre-approved for a Credit Card, there is no guarantee that your Credit Card application will be automatically approved.
Important Aspects to Know About Pre-approved Credit Cards
Some noteworthy facts about pre-approved Credit Cards are as follows:
If your pre-approved Credit Card application gets rejected, your credit score gets impacted significantly.
Pre-approved Credit Cards offered as lifetime-free Credit Cards and interest-free Credit Cards have limited validity or certain rules attached to them. The terms related to the same are specified in your Credit Card agreement.
The waiver on the annual fee marketed as a lifetime free Credit Card does not signify free usage of your Credit Card. It only indicates a temporary discount on the annual fee.
Pre-approved Credit Cards come with an expiration date. If you are interested in applying, you must do so within the specified period. You can check the details regarding the last late to apply and other associated terms on the Credit Card provider’s website.
Difference Between Pre-approved and Pre-qualified Credit Cards
Both pre-approved and pre-qualified Credit Cards indicate a possibility of getting a Credit Card based on a soft inquiry. But they work in different ways.
Pre-approved Credit Cards
Pre-approved Credit Cards are offers made by Credit Card companies without any initiation from your side. Card issuers fetch your credit score and decide if you are a suitable applicant for their Credit Card. They send you a mail to garner your interest based on their research.Pre-qualified Credit Cards
Pre-qualified Credit Cards are offered to you typically based on the interest you show. While comparing Credit Cards, you might fill in a Credit Card survey or an online form. Depending on your provided information, Credit companies can reach out to you with pre-qualified offers.
Benefits of Pre-approved Credit Cards
Here’s how you can benefit from applying for pre-approved Credit Cards:
Sign-in Bonuses & Rewards
Pre-approved Credit Cards often come with special perks. When you apply for the card, you might get welcome bonuses like extra reward points, discounts, shopping vouchers, etc. You can check the terms and conditions applicable to such rewards to optimally benefit from them.Convenient Application
With pre-approved Credit Cards, you have an upper hand in making the choice of whether you want to apply for the card or let go of the offer. You need not spend time comparing various Credit Card offers or send out multiple applications.Opportunity to Build Credit Score
If you qualify for a pre-approved Credit Card based on factors such as your income, age, employment status, and existing debts, you can get approval easily. Post approval, you get an opportunity to build your credit score by using the card responsibly.Competitive Interest Rate
Banks and financial institutions generally offer competitive interest rates on Credit Cards to attract customers. But in the case of pre-approved Credit Cards, they offer an even lower interest rate compared to standard Credit Cards.Time-saving
When you apply for a Credit Card voluntarily, it is best to research various Credit Card companies based on their market position, customer service, rewards program, etc. But with pre-approved Credit Cards, you can save time on research. The competitive offers are sent to you, and you simply need to analyse them to make your decision.
Should You Consider Getting Pre-approved Credit Cards?
As explained above, pre-approved Credit Cards do not necessarily guarantee approval of your Credit Card application. The approval and offer is merely based on your credit score. So, should you opt for a pre-approved Credit Card if you are offered one? If you are confused about the prospect, consider these points to make an informed decision:
Overall Qualification
Pre-approval is only based on your credit score. To actually qualify for the proposed Credit Card, you must fulfil a list of eligibility requirements. They include a stable financial status, a positive debt-to-income ratio, a good repayment record, etc. If you find yourself ticking off all these requirements, you can get approval for the pre-approved Credit Card.Your Needs
Your needs will determine whether a pre-approved Credit Card is the right choice for you. While the exciting offers and convenience that a Credit Card offers are enticing, you should manage your Credit Card spends cautiously. Hence, you should check the value you derive from a Credit Card by considering your needs. You may want to use the Credit Card to convert your purchases into EMIs, manage high-value purchases, fulfil financial emergencies, etc. By keeping your needs in check, you can avoid using your Credit Card frivolously.Affordability
Your financial situation play a crucial role in determining whether you should get a pre-approved Credit Card. Despite the exciting offers and rewards, you still incur interest and other charges associated with Credit Card usage. You should consider these charges to understand if you can afford getting a Credit Card. Not considering your affordability can put an unnecessary financial burden on you and might hinder your experience of using the Credit Card.
A collective assessment of all these aspects will help you decide if getting a pre-approved Credit Card is a good idea.
Get a Pre-approved Credit Card from HDFC Bank
If the pre-approved Credit Card offer aligns with your interests and affordability, and you can satisfy the overall eligibility criteria, the application process becomes convenient. However, before choosing the Credit Card, you must Credit Card company’s reputation. If you wish to apply for a Credit Card from a trusted financial organisation, consider HDFC Bank.
With HDFC Bank’s pre-approved Credit Card, you need not worry about transparency. All the details pertaining to pre-approved offers are specified on HDFC Bank’s website. You can find information related to usage, rewards, charges, and other terms online, before sending your application.
Enjoy the convenience of a pre-approved Credit Card with HDFC Bank.
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Credit Card approvals at the sole discretion of HDFC Bank Limited. Credit Card approvals is subject to documentation and verification as per Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.
