While many card companies continued to push offers to prospective customers throughout the recession, the improved economy and overall reduction of household debt has led to a new surge of offers arriving via mailbox, inbox and in advertisements.
Some credit card offers are great, while others are sub-par at best. Regardless, many companies use tactics to convince you to sign-up, but are not forthright in what those benefits entail.
The latest credit card offer you have received may claim to have a super-low interest rate: who can say no to that? Unfortunately, many times these rates are teaser rates, designed to get you signed up and using the card so that the interest rate can double or even triple in a few months’ time. There are also many stipulations attached to a low rate; usually, only the people with the best credit qualify. If you are anyone else, then you may be disappointed to discover that your new credit card did not come with the interest rate initially promised.
Offers of Pre-approval
Many of us may open a new offer via snail mail or see an offer via email that says we have been pre-approved for a new credit card. This, unfortunately, is nothing more than a ploy to encourage people to apply who might not otherwise. “Pre-approved” basically means that you are an adult with a confirmed address. You will still need to meet the minimum criteria set forth by the credit card company in order to receive a card.
Some individuals can earn cash back based on the type of credit cards they have. Many card companies use this as a tactic to get you to apply for a card: by offering you a card with 3-5% cash back, they hope to encourage the average credit holder to consider opening up a new line of credit with them. Unfortunately, it often doesn’t add up. If you card has a limit of $2,000, then you can only earn $100 after fully maxing it out – making it hardly worth it when you consider any interest. The card companies are able to offer “cash back” due to the fact that most people using these cards end up paying more in interest than they receive in cash back rewards.