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Jul 5 2017

Preapproved Credit Cards: Why Approval Isn’t Guaranteed – How to Opt-Out #mastercard

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Preapproved Credit Cards: Why Approval Isn’t Guaranteed How to Opt-Out

by Odysseas Papadimitriou. CardHub CEO | Sep 25, 2013

A preapproved credit card offer neither contains an active card that you can begin using immediately, nor does it provide a guarantee that you’ll be granted the card should you ultimately decide to submit a formal application.  Rather, it’s a target marketing technique that issuers use to increase application and approval rates and thereby optimize their advertising budgets.

More specifically, credit card companies use basic underwriting data from the major credit bureaus to determine which credit card offers to mail different types of consumers.  This is more effective than sending the same offer to everyone en masse because inevitably a large portion of the market either won’t qualify or would never apply since their credit standing and income merit something better.  You’re simply more likely to seriously consider an offer if it represents a feasible upgrade over what’s currently in your wallet.

While preapproved credit card offers are typically conveyed to consumers through traditional mail, credit card companies are increasingly allowing people to visit their websites and input their name, date of birth, and Social Security Number to automatically determine which cards they are preapproved for.

It’s also interesting to note that while most people consider the terms to be interchangeable, there are actually three distinct types of targeted credit card offers:  1) preapproved offers; 2) preselected offers; and 3) Invitations to Apply (ITAs).  Each one is based on different information and indicates a different level of approval likelihood.

We will discuss these nuances and more in further detail below.





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