Pre-Approved Card Offers May Not Bring Holiday Cheer
And Don't Take The Term Literally
With the holiday shopping season approaching, you may find your mailbox stuffed with "pre-approved" credit card offers.
"Around this time of year, you're gonna get an increase in credit card applications or offers," said Carmel financial planner Peter Dunn, who says this year he's also taking it as a sign of an improved economy. But "Pete the Planner" says it could be a trap for a unwary consumers.
"In 24 months we could have some more credit default issues because sub-prime credit card lending is gonna begin again," said Dunn.
And the term "pre-approved" should not taken literally. Dunn says credit card companies don't have confidential information about you. They use what they have to identify you as likely good risk, but you'll have to undergo a credit check to get the card.
And if you don't accept the offer, there is no impact on your credit rating. Pre-approval is called a "soft hit" which will not count against your credit record.
And Dunn warns against the use of credit for gift buying.
"There's not that January regret, that defeated purpose and feeling," he said. "You can't do that if you pay for the holidays in cash."
If you still want to shop with plastic this year, Dunn urges you to read the fine print.
"A lot of us used to take out credit cards and when we stopped using it, we would just let it sit there." he said. "If you don't use a card, one of the ways credit card companies are gonna money off of people is that they'll start assess a six dollar a month inactivity fee."
If you don't to receive pre-approved credit offers, here's how to stop them...
To opt out for five years: Call toll-free 1-888-5-OPT-OUT (1-888-567-8688) or visit www.optoutprescreen.com. The phone number and website are operated by the major consumer reporting companies.
To opt out permanently: You may begin the permanent Opt-Out process online at www.optoutprescreen.com. To complete your request, you must return the signed Permanent Opt-Out Election form, which will be provided after you initiate your online request.
When you call or visit the website, you'll be asked to provide certain personal information, including your home telephone number, name, Social Security number, and date of birth. The information you provide is confidential and will be used only to process your request to opt out.