Credit Card Glossary
Pre–Approved Credit Card
A pre-approved credit card is an offer that is sent to you from another credit card company that offers a lower interest rate on your credit card balance then the card you have now. Usually in the cover letter you are told that you are being offered this rate because you have a good credit rating or because you have been approved for a higher credit limit then the one you have on your current credit card.
Pre-Approved Credit Cards are usually offered as the result of the credit card company obtaining lists from the major credit reporting agencies of people who meet certain criteria. The individuals on these lists are then solicited to acquire for more credit cards.
If you say yes to a pre-approved credit card the first thing that the credit card company actually does is make an inquiry into your credit report. This causes a negative mark on your credit. The reason they have to do this is explained in the fine print of the pre-approved credit card offer.
Even though you have been approved for the new card you are not actually pre approved for the great new interest rate that was offered in your direct marketing pitch. Instead (if you read the fine print) your credit rating may be examined and then you may be offered a somewhat less favorable interest rate or significantly lower credit limit in a subsequent credit card mailing.
Also you may not quality for the low interest rate unless you agree to transfer your entire present credit card balance to the new card. Otherwise you could end up paying even more interest then you were on your new card.