credit card Archives | Page 29 of 40

Nov

2022

What Parents and Grandparents Really Want This Holiday Season

By Pam O’Brien | Credit, credit card, Family Finances | Comments Off

Your mom wants something surprising for the holidays this year. And so does your dad. In our holiday gift survey, we asked parents and grandparents to reveal the number-one present they hope to find under the tree this season. What they told us is going to make your holiday shopping very merry and bright.

In past years, you probably spent a lot of time searching online and in stores for the perfect Christmas gift ideas for parents and Christmas gift ideas for grandparents. This year, there’s no need to stress out about it because you’ll know exactly what to buy.

So what do mom and dad want you to get them? And what do grandparents want for Christmas? In our survey, we asked 1,000 of them (250 of each — moms, dads, grandmothers, and grandfathers) to share the holiday present they really want this season — and what they don’t want. Here’s what they told us; consider these survey findings our gift to you.

Source: Based on a What People Actually Want This Holiday Season survey of 1,000 U.S. adults from October 26, 2022 to October 27, 2022.

Gift Cards Are the Favorite Gift by Far

Parents and Grandparents Want Gift Cards More Than Anything This Holiday Season

The number-one gift requested by moms, dads, grandmothers, and grandfathers is … a gift card! And it wasn’t even close. Gift cards were the most-requested gift across the board.

Almost 33% of respondents picked gift cards as their most-wanted holiday gift. Here’s how it breaks down across the generations:

• Moms: 39%

• Dads: 31%

• Grandmothers: 34%

• Grandfathers: 27%

The Type of Gift Card You Give Makes a Difference

There are all kinds of gift cards to choose from, including gift cards for restaurants, stores, and airlines, to name just a few. So, as you get ready to shop and celebrate the holidays without blowing your budget, which type should you get for your parents and grandparents?

A gift card that can be used anywhere, like a Visa gift card, was the top choice, selected by:

• 45% of moms

• 44% of grandmothers

• 40% of grandfathers

• 38% of dads

The one group that wants a different kind of gift card? Moms ages 35 and up. They preferred a gift card to a retailer like Target, Amazon, or Walmart.

The way gift cards function is similar to how credit cards work, since your parents and grandparents can use them to buy whatever they like. Perhaps that’s why they were so popular in our survey: Your relatives can pick out exactly what they want.

Skip the Fancy Jewelry

What Do Parents and Grandparents Want the Least for the Holidays? Fine Jewelry.

You might think mom would be thrilled with luxury goods like an expensive necklace, bracelet, or earrings, but jewelry is actually at the very bottom of her list. When asked the gift they wanted least, most moms (22%) said fine jewelry. Dads agreed — 21 percent chose fine jewelry, such as a watch, as their least favorite holiday gift.

Grandparents also said no thanks to fine jewelry:

• 26% of grandmothers picked it as their least favorite gift

• 21% grandfathers chose at gift they wanted least

Recommended: Secrets to Not Paying Full Price

Holiday Gift Ideas for Mom

What moms Want Most for the Holidays

Here’s what Mom wants most:

• A gift card: 39%

• No gift at all — she just wants to spend time with family: 14%

• An experience (like a concert or vacation): 10%

• Clothes or shoes: 9%

• A homemade gift like a photo collage: 7%

• Electronics: 6%

• Jewelry: 6%

• Home goods: 5%

• Donation to a charitable organization: 3%

• Beauty/Health products: 2%

Holiday Gift Ideas for Dad

What Dads Want most for the Holidays

Here’s what dad wants most:

• A gift card: 31%

• Electronics: 14%

• No gift at all — he just wants to spend time with family: 12%

• An experience (like a concert or vacation): 12%

• Clothes or shoes: 10%

• Jewelry: 9%

• A homemade gift like artwork: 5%

• Donation to a charitable organization: 4%

• Home goods: 2%

• Beauty/Health products: 2%

If you’re thinking about getting dad the electronics he wants, but you don’t have the cash to pay for the gift upfront, applying for a credit card, and charging the electronics to it, is an option you may want to consider.

Holiday Gift Ideas for Grandmothers

What Grandmothers Want Most for the Holidays

• A gift card: 34%

• No gift at all — she just wants to spend time with family: 22%

• An experience (like a concert or vacation): 12%

• Clothes or shoes: 8%

• A homemade gift like artwork: 6%

• Electronics: 5%

• Jewelry: 4%

• Donation to a charitable organization: 3%

• Home goods: 3%

• Beauty/Health products: 2%

Holiday Gift Ideas for Grandfathers

What Grandfathers Want Most for the Holidays

• A gift card: 27%

• No gift at all — he just wants to spend time with family:14%

• Electronics: 12%

• An experience (like a concert or vacation): 10%

• A homemade gift like artwork: 10%

• Clothes or shoes: 8%

• Donation to a charitable organization: 8%

• Home goods: 5%

• Jewelry: 4%

• Beauty/Health products: 2%

Recommended: 41 Charities to Support This Year

Who Buys the Best Gifts?

Who Gives the Best Gifts?

It’s unanimous: Moms, dads, grandmothers, and grandfathers all agree that their spouse or partner is tops when it comes to choosing holidays gifts. No other person even comes close.

Who Gives the Best Gifts?

• Spouse/partner: 37%

• Parents: 18%

• Friends: 10%

• Siblings: 9%

• Other relatives: 9%

Whose Gifts Rate the Worst?

Ranking at the bottom of the best gift-giver list: In laws and bosses. Only 4% of respondents said their mother-in-law and father-in-law give good gifts, and just 1% said their boss does.

Regifting is Real — and It Can Be Pretty Awkward

How Many People Have Regifted a Gift?

There’s a lot of regifting going on: 41% of our respondents admitted they’ve done it. But when the tables are turned on them, things can get a little uncomfortable. Fortunately, many have a sense of humor about it.

Almost 1/3 of Moms Have Been Regifted a Gift They Gave First

• 68% thought it was funny

• 32% were hurt, annoyed, or mad

Yet this didn’t deter them from doing it themselves: 38% of moms have regifted what they didn’t want. Most of these unwanted gifts were from friends.

Almost Half of Dads Have Been Regifted a Gift They Gave

• 71% thought it was funny

• 28% were hurt, annoyed, or mad

Dads are even more likely than moms to regift: 47% of them have done it — mainly with presents from distant relatives.

Lots of Unwanted Gifts Are Sitting in a Closet Someplace

When they get a Christmas present they don’t want or need, the overwhelming majority of respondents said they hang onto them, rather than exchange them. This was the answer chosen by:

• 80% of grandmothers

• 79% of moms

• 74% of grandfathers

• 70% of dads

So Whose Gifts Do They Take Back?

Of those parents and grandparents who return or exchange gifts:

• Moms are most likely to return gifts from friends

• Dads are most likely to return gifts from parents or other relatives

• Grandmothers are most likely return gifts from distant relatives

• Grandfathers are most likely to do return gifts from distant relatives or coworkers

Plenty of Moms and Dads Are Wishing for a Vacation

If you splurge and get your parents a trip as their holiday gift, expect them to waste no time in packing their bags. Of the moms and dads who chose an experience as the gift they most want for the holidays, a vacation was at the very top of the list.

While paying for a vacation can be expensive, you might want to think about splitting the cost with your siblings or putting it on your credit card to help cover the cost. This is one reason why getting a credit card can be helpful when you’re buying holiday gifts.

Time Together Might Be the Greatest Gift of All

You may not need to get your parents a lot of presents (besides a gift card, that is!). A number of moms and dads who took our survey said they wanted family time over the holidays more than anything. In fact, for moms, spending time with family is their second most-wanted gift.

For dads, family time came in third. Electronics like gaming systems edged it out slightly.

Grandmothers and grandfathers want to spend time with family most of all. Each of them chose it as their second favorite gift option.

The Takeaway

One specific holiday gift will please your parents and your grandparents this year: a gift card. Not only does this make your shopping easier, but it gives your loved ones exactly what they want. A gift card that can be used anywhere, like a Visa gift card, is what the respondents to our survey wanted most.

If you’re looking for other gift options, dads are partial to electronics, like gaming equipment, and both moms and dads would be happy to find airline tickets for a vacation in their stocking.

As you’re doing holiday shopping for your family, you can get a gift for yourself at the same time. With a credit card from SoFi, you can earn generous cash-back rewards on all purchases.

Photo credit: iStock/seb_ra

Nov

2022

What Is the Minimum Credit Score Needed for a Credit Card?

By Timothy Moore | Credit, credit card, Family Finances | Comments Off

There is no minimum credit score needed for a credit card. Even borrowers with poor credit (a score of 300) or no credit card at all can qualify for some credit cards. However, options for bad-credit borrowers are limited and usually come with a high annual percentage rate (APR) and fees. Borrowers with no credit or poor credit may also only qualify for secured credit cards.

By boosting your credit score, you’ll have more options for credit cards with better rates, fees, and even rewards, bonuses, and perks. In this piece, we’ll review:

• How your credit score affects credit card approval

• The minimum credit score for a credit card

• How your credit score is calculated — and how you can improve it

• Credit cards for borrowers with fair, bad, and no credit

How Your Credit Score Affects Your Odds of Credit Card Approval

A good or excellent credit score increases your odds of credit card approval. But if you have a bad credit score, you’re not out of luck. Some credit card issuers have options for borrowers with no credit history or extremely low credit scores.

Before applying for a credit card, it’s a good idea to read the fine print for that specific card. Often, credit card companies will list their minimum credit score requirements for the card. If you’re at the bottom of the stated range, you may have a harder time qualifying.

To avoid getting declined (and having an unnecessary hard inquiry on your credit report), you may want to consider a less competitive credit card that you’re more likely to be approved for based on your credit score.

What Credit Score Do You Need to Get a Credit Card?

While there is no minimum credit score to get a credit card, you’ll need a higher credit score to qualify for the best credit cards available. Typically, travel credit cards and cash-back credit cards are reserved for borrowers with good to excellent credit (670 and above on the FICO scale).

If you have a fair credit score, you might be able to qualify for a decent credit card with a higher annual percentage rate (APR) and limited perks. Experts recommend having at least a 600 credit score to qualify for a standard credit card.

Borrowers with bad credit or no credit at all may be limited to secured credit cards (cards that require a security deposit as collateral), credit-building cards, or high-interest credit cards with high annual fees.

Recommended: How to Avoid Interest On a Credit Card

Tips for Estimating the Credit Score You Need

How can you determine a credit card’s credit score requirements? Here are a few ways to estimate the minimum score you’ll need:

• Checking the website: Often, the credit card issuer will advertise in plain writing what credit score is required for each of its credit cards.

• Reading reviews: If the issuer’s website isn’t clear, you may want to check third-party review websites, which often print the recommended credit scores needed for credit cards.

• Using third-party services. Platforms like Credit Sesame and Credit Karma can predict which credit cards you’ll qualify for with your current credit score — but it’s never guaranteed. Such services also typically offer free credit score monitoring.

• Getting preapproved. Many credit card issuers offer preapproval for their cards. This means they only initiate a soft pull on your credit report (with no effect on your credit score). A preapproval is not a guaranteed yes; you still have to go through the process, but it can instill more confidence if you’re worried about your chances.

Factors Affecting Your Credit Score

Boosting your credit score is a great way to qualify for more (and better) credit cards. But knowing how to increase your credit score requires that you know what affects your credit score in the first place.

FICO and VantageScore both constantly monitor consumers’ credit and assign them different credit scores based on a consumer’s activity. While the models are similar, each company uses its own proprietary scoring method to calculate credit scores. Both scores range from 300 to 850.

FICO Scoring Method

Your FICO credit score depends on five key factors:

• Payment history (35%): The largest factor impacting your credit score is your payment history. Making on-time payments not just for loans but for things like rent and utilities will boost your score. Late payments can stay on your credit report for up to seven years.

• Credit utilization (30%): Using less of the credit available to you can raise your score; on the other hand, maxing out each card in your name every month can lower your score.

• Credit history (15%): Everything’s better with age, so they say. The length of your credit history plays an important part in your credit score. Responsible credit users should see their scores increase over time.

• Credit mix (10%): Having a healthy mix of loan types (both installment credit and revolving credit) can boost your score — if managed properly. That means mortgages, auto loans, student loans, personal loans, and credit cards can all help your credit score.

• New credit applications (10%): When you apply for new credit, lenders will make a hard inquiry on your credit report. Even if you are denied the credit, this inquiry will temporarily lower your credit score, which is how applying for a credit card affects your credit score.

Recommended: When Are Credit Card Payments Due?

VantageScore’s Scoring Method

VantageScore, on the other hand, assigns different factors a value of influence:

• The most influential factor affecting your VantageScore is payment history, as it is with FICO.

• Three highly influential factors include the age of credit, type of credit, and credit utilization.

• A moderately influential factor is the total debt balance you maintain across all loans.

• The least influential factor is your recent credit activity (opening new accounts, recent hard inquiries, etc.).

Tips for Improving Your Credit Score

Wondering how to improve your credit score to increase your chances of credit card approval? Here are some tips:

• Understand your credit score: The first step to improving your credit score is knowing how it’s calculated — and knowing what your current credit score is.

• Make on-time bill payments: Paying bills on time is good for more than just avoiding late fees. It’s also the top factor in determining your FICO score and VantageScore.

• Decrease your credit utilization: By reducing the amount of purchases on your credit cards — and paying them off in full every month — you’ll decrease your credit utilization, which can boost your credit score.

• Become an authorized user: If you have no credit history or are repairing bad credit, you may benefit from becoming an authorized user on a loved one’s credit card. If they are responsible with the card, it’s an easy way for you to boost your score without applying for your own card.

• Keep old cards open: Once you qualify for better credit cards, you may be tempted to close out old accounts. But each of those cards has a credit limit. By keeping the card open but not using it, you decrease your overall credit utilization and keep the average age of your credit higher. The exception: If the card has an annual fee and you’re not using it for anything, it’s probably not worth keeping it open.

• Only apply for credit cards when you need them: Each time you apply for a credit card, the issuer enacts a hard inquiry on your credit report, which lowers your score. Because of this, it’s a good idea to wait at least six months between credit card applications — and only apply when you need to. Choose your credit card applications wisely.

Recommended: Tips for Using a Credit Card Responsiblya

Getting a Credit Card with Bad Credit

Bad credit is not a death sentence on your chances of getting a credit card. In fact, you can find credit cards on the market designed specifically for people with bad credit. However, such cards typically have high fees and interest rates.

If you’re worried about high fees and rates, a secured credit card for bad credit may be the better option. Some secured credit cards even approve borrowers without conducting a credit check and have no APR. The big difference between a secured vs. unsecured credit card is that secured credit cards require a security deposit, which acts as the card’s credit limit.

Alternatively, bad-credit borrowers may be able to qualify for a retail credit card. While retail credit card credit score requirements vary, many are available to borrowers with limited or bad credit.

Recommended: What is the Average Credit Card Limit?

Getting a Credit Card with Fair Credit

With a fair credit score (580 to 669 per FICO), you won’t qualify for the top rewards credit cards available. That being said, it’s still possible to get approved for an unsecured credit card with no annual fee and limited perks.

Interest rates tend to be higher for those within this credit score range, but if you can pay the card off in full every month, you won’t have to worry about racking up credit card debt. Eventually, you may even improve your credit score enough to graduate to a rewards credit card with a better rate and terms.

Getting a Credit Card with No Credit

What if you have no credit history at all? Believe it or not, you can still qualify for a credit card with no credit history — though your options may be more limited.

Like borrowers with bad credit, you can likely qualify for no-frills secured credit cards if you can come up with the security deposit. Alternatively, borrowers without an established credit history can ask a close friend or family member to be added as an authorized user on their card. There are also credit cards designed for those who are currently enrolled in school.

The Takeaway

While there isn’t a minimum credit score for a credit card, having a good to excellent credit score improves your chances of approval for the top credit cards on the market. If you have a bad credit score or no credit history at all, you may be able to qualify for secured credit cards or credit cards. However, you’ll generally face higher fees and APRs.

Even if your credit score is not as high as you might like, there are likely options available if you are seeking a credit card, though they may not come with all the perks. If your score is fair or poor, look into secured credit cards or ways to build your score.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can you get a credit card with limited or no credit history?

Yes, you can get a credit card with limited or no credit history. Borrowers with no history can look for secured credit cards or consider becoming an authorized user on someone else’s credit account. Without credit history, however, you likely will not qualify for low-APR credit cards or rewards credit cards.

Can I get a credit card with a score of 600?

Yes, with a credit score of 600 (in the fair credit range), you may qualify for basic credit cards that offer limited perks, if any. You likely will not be able to qualify for a rewards credit card. However, credit card issuers may at least approve you for an unsecured credit card, though likely with a higher APR.

What is the easiest card to get approved for?

If you have no credit history (or a limited credit history) or a bad credit score, the easiest card to get approved for is typically a secured credit card. Secured credit cards present lower risk to credit card issuers because borrowers must make a security deposit that serves as collateral.

Photo credit: iStock/Antonio_Diaz

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Nov

2022

Guide to Checking Your Credit Card Approval Odds

By Jennifer Calonia | Credit, credit card, Family Finances | Comments Off

Figuring out whether you will get approved for a credit card is seemingly simpler now with credit card approval odds calculators. These tools can offer guidance, highlighting credit cards with high approval odds in your favor. However, they are not always reliable.

Still, learning how to leverage the approval odds information that these tools provide can be helpful. You can use the insights to make yourself a more desirable borrower for credit card companies, thus increasing your future approval odds.

What Are Credit Card Approval Odds?

Credit card approval odds inform you of the likelihood that you’d get approved for a particular credit card. How these approval odds are determined, including which details are assessed, can vary between services and card issuers.

For example, a credit card approval odds calculator might suggest that, based on your credit score and income, you have an 80% chance of getting approved for a credit card. It might also offer you a few credit cards with high approval odds to explore.

Checking Your Credit Card Approval Odds

Using a credit card approval odds calculator offers a glimpse of your approval chances, but not a promise. That’s because a credit card company or credit card marketplace can’t provide a 100% assurance of your approval without going through a formal underwriting process.

Underwriting is the step where a lender or issuer evaluates your credit portfolio and application details (like existing debt and income) to calculate whether it would be a risk to loan credit to you. Since this process can only happen after an application is submitted, a tool that states you have high approval odds doesn’t mean your eventual approval is guaranteed.

Prequalifying for a Credit Card Approval

There are a couple of ways to obtain a pre-screened credit card to gauge your approval odds: Receiving a pre-qualification offer or requesting a pre-qualification from a credit card issuer.

Using a Prescreened Offer

Based on your general information from the credit bureaus, card issuers might send you an unsolicited prescreened offer stating that you might be qualified for its credit card.

At this step in the process, the card company has only looked at limited markers, like whether you’ve met its minimum credit score requirement. It hasn’t performed a hard credit check, nor evaluated your existing debt or income to base an approval on. However, if you receive a pre-qualification offer, this can be a positive sign that your approval odds are better than if you hadn’t received it.

Checking the Card Issuer’s Website

You don’t always have to cross your fingers in hopes that a card issuer will give you a prescreened offer. Some credit card issuers offer a pre-screening form that you can fill out to see if you’re pre-qualified for its card. If your preferred card doesn’t let you request a pre-qualification, you might find more insight on the issuer’s website about what’s required for approval.

While you’re on the card issuer’s site, it’s helpful to review its response timelines so you can track your pre-qualification or application progress. This includes the timeline for an application decision, as well as how long it takes to get a credit card if you’re approved.

What To Do if You Prequalify

If you prequalify for a credit card, you can choose to submit an application. Doing so will require a hard credit inquiry before a decision is made, which can temporarily have an effect on your credit score.

Additionally, you can continue shopping around for different cards to see if another product offers a lower interest rate or better incentives.

Recommended: How to Avoid Interest On a Credit Card

What To Do if You Don’t Prequalify

If you don’t pre-qualify for a credit card, you can proceed in a few ways:

• Hold off on getting a new card. Too many hard credit inquiries might flag you as a high-risk borrower who’s reliant on credit. If you’ve recently had multiple inquiries on your credit, consider waiting a couple of months before re-applying for a new card.

• Work on your credit score. All card issuers look at your credit score to see if it meets its minimum requirement. A higher credit score is a positive indicator that you’re a responsible borrower.

• Apply for a secured credit card. A secured credit card is a credit-building card in which you deposit money or collateral in a certain amount. This amount acts as your credit limit.

• Appeal the decision. If you applied for a credit card and were denied, the issuer must legally inform you of the reason for the denial. If you can provide more information that might sway the issuer in your favor, you can ask them to reexamine your application.

Tips for Improving the Likelihood of Approval

Whether you’re getting a credit card for the first time or adding a new card to your rotation, there are a few steps you can take to improve your approval odds.

Reviewing Your Credit Report

Your credit report gives credit card issuers a comprehensive view of your borrowing habits to date. Since it’s a highly scrutinized factor when approving applications, review your credit report before submitting an application.

Check that all accounts, their statuses, and the amounts are accurate. If you spot an account that looks outdated or incorrect, reach out to the credit bureaus immediately to dispute it.

Taking a Look at Your Credit Score

In addition to ensuring your credit report is accurate, evaluate where your credit score stands today. Credit scores are the most common credit card requirements that influence your approval odds. For instance, if a card issuer explicitly states that its minimum credit score required is 720, but your score is 650, your credit card approval odds might be low.

Minimizing Your Debt

Keep your debt-to-income (DTI) ratio as low as possible. Credit issuers use this ratio as a way to determine whether you can afford to pay back potential purchases made on the card. The ratio is based on your aggregate monthly debt amounts divided by your gross monthly income.

Stating All of Your Income

As mentioned above, your income is one of multiple factors used to determine your credit card approval odds. A higher income can reduce your DTI ratio, making you a less risky customer to extend credit to.

You can include various types of income sources on your application. This might include your salary from your full-time job, earnings from a side gig, Social Security benefit payouts, and alimony.

Managing Payment History and Credit Utilization

Staying on top of your existing loan and credit card payments keeps your credit score healthy. This means paying at least the minimum amount due, and making those payments on time every month.

Additionally, be aware of how much of your total credit limit you’re using, compared to how much credit you have access to. This ratio is called your credit utilization ratio. There’s no golden credit utilization ratio to keep in mind, according to FICO, but the lower it is, the better.

Recommended: When Are Credit Card Payments Due?

Comparing Cards Carefully

With so many credit card products on the market, choosing a credit card that suits your borrowing needs and qualifications can help you find the right card.

Ensure you’re comparing credit cards with the same credit card features between different cards to accurately determine their pros and cons. Some considerations to make when comparing credit cards include:

• APRs. The annual percentage rate, or APR, is how much you’ll pay in interest if you carry a balance on the card. The lower the interest rate, the better.

• Balance transfer costs. Some issuers offer a zero-interest balance transfer promotion for a limited period, while others don’t. Similarly, some credit cards charge an additional balance transfer fee.

• Penalty APRs. If your account becomes delinquent, some card issuers impose a higher penalty APR on your existing balances and future transactions. Make sure you understand how a credit card works and which rules apply.

• Fees. Certain cards charge an annual fee just for the privilege of carrying the card. This fee is in addition to interest charges you might pay for rolling over a balance, month over month.

• Rewards program. If you’re after credit card rewards, compare the details of each card’s program. For example, look at whether rewards points or miles are tiered or offered for specific categories, or if there’s a flat rewards rate for all purchases.

• Incentives. You might encounter special promotions, like a welcome bonus or promotional 0% APR. These added perks should factor into your decision.

Recommended: What is a Charge Card?

The Takeaway

Although a credit card approval odds calculator or tool can offer broad guidance about whether you’ll be approved, it doesn’t replace a card issuer’s underwriting criteria. The credit card company relies on its own underwriting team to ultimately decide whether your application is approved. This decision is based on the specific information on your application and your creditworthiness.

FAQ

Does getting rejected for a credit card hurt my credit?

A credit card pre-approval rejection doesn’t hurt your credit since pre-approvals typically involve a soft credit check. However, if you move forward with a credit card application that involves a hard credit inquiry, your credit score might temporarily drop, regardless of whether you were approved or denied.

Are credit card approval odds accurate?

Generally, credit card approval odds calculators offer guidance toward credit cards with good approval odds. However, they don’t provide a 100% guarantee that you’ll be approved. There have been reported cases of tools claiming that a consumer has high approval odds with a card, only to get denied upon applying. The card issuer is the only entity that can accurately say whether you’re approved for a credit card.

How can I improve my credit card approval odds?

The best way to get good approval odds for credit cards is to minimize high-risk borrowing practices. One way to achieve this is by building your credit score. Keep your credit balances low, make timely monthly payments, maintain long-standing credit accounts, and avoid opening multiple new lines of credit in a short period.

How do you guarantee credit card approval?

There’s no way to absolutely guarantee credit card approval to any particular card. Card issuers base their decisions on a number of factors, like your credit history, credit score, income, credit utilization, debt-to-income ratio, and more.

Photo credit: iStock/akinbostanci

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Nov

2022

What Does Preapproved Mean for a Credit Card?

By Jackie Lam | Credit, credit card, Family Finances | Comments Off

When you get preapproved for a credit card, this means you’ve met initial criteria to receive an offer to get a credit card. In other words, you’ve popped up on a list of consumers that fit the bill for a credit card company’s requirements and are being invited to sign up for a card.

In this piece, we’ll discuss exactly how preapproved credit card offers work, the difference between what preapproved for a credit card means vs. prequalifed, and the pros and cons of preapproved offers.

What Is a Preapproved Credit Card Offer?

As mentioned, a preapproved credit card offer is when a credit card company officially invites you to apply for a specific credit card. Credit card issuers usually use criteria pulled from credit reporting agencies to extend these offers. If you fall within the parameters of the credit card requirements set by the card issuer, then you may receive an offer — either via email, snail mail, or over the phone — to formally apply for approval for the card.

How Do Preapproved Credit Card Offers Work?

While it sounds promising, getting a preapproved credit card offer doesn’t necessarily mean you’re guaranteed to get approved for a credit card. Even if you’re preapproved, you’ll need to properly apply.

When you do, the credit card issuer will look over your application and usually request additional financial and personal information. The credit card company will also check your updated credit report to figure out if your credit still meets the criteria it referred to when it sent you the preapproved offer.

Preapproved vs Prequalified Credit Card Offers

The terms “preapproved” and “prequalified” often are used interchangeably when it comes to prescreened credit card offers. And within the realm of credit cards, they often are one and the same. But in other types of lending, they mean different things.

Prequalified offers are usually requested by you, the consumer. To get prequalified, you typically need to provide basic personal and financial information. During the screening process, the credit card issuer will check your credit. However, it will only conduct a soft pull, which won’t impact your credit score. After reviewing the info you submitted, the credit card company will let you know if you’re likely to get approved.

Preapproval, on the other hand, is when you’re prescreened for offers by the credit card company. These credit companies work with the three major credit reporting agencies — Equifax, Experian, and TransUnion — to come up with a list of consumers that meet their lending criteria.

With both preapproval and prequalification, you’ll still have to submit to a hard credit inquiry and potentially provide additional financial information to actually get approved for the loan product. Keep in mind that unlike a soft inquiry, a hard credit inquiry will temporarily affect your score.

Benefits of a Preapproved Credit Card

Now that you know what preapproved means for a credit card, you may be wondering what the benefits are. In general, these are the upsides of preapproval, whether for a valuable rewards card or a virtual credit card.

Indicates Your Odds of Approval

Perhaps the most obvious benefit of getting preapproved for a credit card is that you’ll have a better sense of how likely you are to ultimately get approved for the card. Although preapproval is not a guarantee of eventual approval, if a credit card issuer has already selected you to apply and your financial situation hasn’t drastically changed, you’re likely within the required parameters to get the card.

Won’t Impact Your Credit Score

One of the major benefits of getting preapproved for a credit card is that it won’t impact your credit score. To get preapproved, the card issuer does a soft pull of your credit. Only if you decide to formally apply for the card will the credit card company do a hard pull of your credit.

Could Allow You To Secure More Competitive Terms

Getting preapproved for a credit card may allow you to secure a lower interest rate than you’d otherwise be able to get. This is because the lender is effectively advertising the card to you in order to get you to apply. Keep in mind, however, that your rates aren’t set until after you formally apply.

Recommended: How to Avoid Interest On a Credit Card

May Provide Access to Better Intro Offers

Another advantage of a preapproved credit card is that it might come with more lucrative perks than what’s more widely advertised to the public. You might be privy to cards with more attractive sign-up bonuses or introductory earnings opportunities. For instance, a cash-back credit card might offer a higher initial earnings rate through preapproval offers.

Could Get a Longer Intro APR for Balance Transfers Cards

For balance transfer credit cards that allow you to transfer your existing debt over to the new card, you might be able to get a lower introductory annual percentage rate (APR) for longer through preapproved offers. This longer introductory period could make it easier to pay off your balance in full before the regular interest rate kicks in.

Easier for You

Because credit card companies have vetted you and know that you’ve passed its criteria, you don’t have to spend time researching cards. Instead, these offers are coming to you. Still, when choosing a credit card, it doesn’t hurt to take a look around to make sure this is truly the right fit for you.

Drawbacks of a Preapproved Credit Card

While there are benefits of preapproved credit card offers, there are drawbacks to them as well.

Might Not Be the Best Card for You

While you don’t have to jump through the same hoops as you would looking for a credit card on your own, the credit card you’re preapproved may not be the right one for you. It might be a good idea to spend some time doing your own research and understanding differences in how credit cards work even if you do get preapproved.

Could Get Flooded With Unwanted Offers

Preapproval offers may lead to getting a lot of unsolicited emails, mail, or phone calls. Especially if you’re not in the market for a new credit card, you could feel inundated with offers you don’t necessarily want or need.

Potential for Theft of Personal Information

There’s a chance that a would-be identity thief can intercept your prescreened offer and get ahold of your name and mailing address. The good news is that prescreened offers are one of the least likely forms of identity theft. Plus, an identity thief would likely need information beyond what’s included in a preapproval offer.

Data Privacy Issues

This is not very common, but there’s a chance that your name, address, and other personal information are stored in databases for consumers that qualify for prescreened offers. This means that in the instance of a data breach, your information could be accessed.

Temptation to Open More Cards

Receiving preapproved offers for credit cards may tempt you to open a new credit card you don’t necessarily need, especially if the preapproval offer includes a lucrative sign-up bonus or an extended introductory APR offer. Especially if you’re already set with your lineup of credit cards, this might entice you to take on more cards than you can comfortably manage.

When You May Need Credit Card Preapproval

You might want to receive a preapproved credit card offer if you’re in the market for a new credit card and would rather not go through the full process of researching credit cards. As you know you already meet certain lending criteria, the odds of getting approved for a card are improved.

Keep in mind, however, that you don’t need to get credit card preapproval in order to apply for a credit card. If you’re getting a credit card for the first time and have a limited credit history, for instance, you’re likely not going to get so many preapproval offers — but that doesn’t mean you can’t still try applying.

Recommended: What is the Average Credit Card Limit?

Tips for Getting a Preapproved Credit Card Offer

If you’d like to get preapproved offers, you’ll want to opt in by visiting OptOutPrescreen.com . From there, you can choose to get these offers through the mail, email, or via phone.

Instead of waiting for offers to come to you, you can also get preapproved by visiting a credit card issuer’s website and applying for prequalification. This typically requires providing basic personal and financial information.

Recommended: How Long It Takes to Get a Credit Card

Tips for Improving Your Chances of Preapproval

While you can still get preapproved for offers with not-so-great credit, you’ll get offers with the most favorable terms and rates with a strong credit score. To keep your credit score game strong and thus improve your chances of improval, make sure to do the following:

• Avoid late payments

• Keep your credit utilization rate low

• Aim to keep cards open

• Don’t apply for too many new accounts

• Maintain a diverse mix of different forms of credit

Recommended: When Are Credit Card Payments Due?

How Does a Preapproved Credit Card Impact Your Credit Score?

A preapproved offer for a credit card doesn’t impact your credit score. As we talked about, lenders will do a soft pull of your score, which doesn’t affect your score.

But if you decide to apply for a card, the credit card issuer will do a hard pull of your credit. This will most likely ding your score, though generally only temporarily.

Recommended: When Are Credit Card Payments Due?

Opting Out of Preapproved Credit Cards

If you don’t want to get flooded by preapproval offers, you can decide to opt out. Visit the website OptOutPrescreen.com and follow the simple steps outlined on the website to do so. You then won’t be included on lists to get considered for preapproval for five years.

The Takeaway

A preapproved offer for a credit card means you’ve met certain lending criteria to most likely get approved for a specific card. You’ll still need to officially apply to secure approval though. But if your credit score and financial history are the same as when you initially received the offer, there’s a high likelihood you’ll get approved.

FAQ

How long does it take to get a credit card if you are preapproved?

It depends on the credit card and credit card company. If you’re preapproved for a card, you’ll still need to officially apply. If you do get approved for a card, it could take anywhere from five business days to two weeks for your card to arrive in the mail.

Can you get denied after preapproval?

In some cases, yes. For instance, if your credit or financial situation changed between the time you received a preapproved offer and when you applied, you might get denied.

Can I get a credit card if I am not preapproved or I don’t qualify for a credit card?

Yes, you don’t need to get preapproved for a credit card; it simply nixes a few steps and boosts your odds of getting a card. However, you will need to qualify for a credit card to get it. This happens if you meet the credit card company’s lending criteria. If you do, you’ll have a chance of getting a particular credit card.

Should I still apply if I am not preapproved for a credit card?

Just because you aren’t preapproved doesn’t mean you won’t be able to get a particular credit card. Spend some time doing your homework to figure out which cards are a good fit for your needs and financial situation. When choosing a credit card, it’s important to check the rates, credit limits, and fees.

Photo credit: iStock/akinbostanci

Nov

2022

What Is a Black Credit Card? How It Works

By Jennifer Calonia | Credit, credit card, Financial Independence | Comments Off

Colloquial references to a black credit card typically refer to the American Express Centurion Card that launched in 1999. It quickly developed a reputation for being more than a credit card — rather, it became a status symbol of ultra-wealth and limitless spending power reserved only for the elite.

The rumored black card requirements — such as a steep minimum spending criteria — add more intrigue to this luxury card. Here’s a look at how to get a black credit card, as well as the black credit card’s benefits and drawbacks.

What Is a Black Credit Card?

A black credit card is an ultra-luxury private banking credit card product that’s designed to support the credit needs of the world’s upper-echelon, including A-list celebrities, professional athletes, and multi-millionaires..

Although the black credit card meaning was originally derived from the AmEx Centurion Card, it now includes other luxury cards that have since come to the market. The list of exclusive card products include the Dubai First Royale Mastercard and the J.P. Mortgage Reserve Card.

Although the Mastercard Black Card might have the phrase “black card” in its name, it’s more accessible and arguably not in the same caliber as the aforementioned cards. That’s because consumers can submit an application online for this card without first being invited, which is more in line with typical credit card rules.

How Black Credit Cards Work

Unlike other consumer credit cards, the most exclusive black credit cards aren’t available for online applications. Card issuers publish very limited details — if any at all — about how to apply for the card or what it takes to receive an invitation. All of the elusiveness only enhances the allure of black cards.

Aside from their exclusiveness, black cards are generally known for having no credit limit, allowing members to spend freely. However, credit card issuers have already determined who they feel is financially capable of wielding the black card’s limitless buying power.

Requirements for Getting a Black Credit Card

Specific black credit card requirements and thresholds vary between black card products. However, they generally include the following factors:

• Minimum annual spending

• Income and/or net worth

• Creditworthiness

If you believe that you meet the criteria for a black credit card, you can reach out to the card issuer directly to see if you’re eligible. American Express, for instance, offers an online form for its Centurion Card for those who want to request consideration.

What Kinds of Perks Do Black Credit Cards Offer?

Whether you’re still learning how credit cards work or are experienced with credit, you likely know that different cards offer varying benefits, including rewards, travel and shopping credits, and more. The perks of a black credit card also differ depending on the type of black card.

For example, the AmEx Centurion Card, offers the following black card benefits:

• VIP airport lounges. Access to AmEx’s Global Lounge Collection, including the coveted The Centurion Lounge.

• Travel accommodation enhancements. Upgraded bookings and credits through AmEx’s Fine Hotels and Resorts and The Hotel Collection programs.

• Airline loyalty status. Complimentary top-tier status through airline partner loyalty programs.

• Unique experiences. Access to one-of-a-kind travel experiences around the world.

• Travel inconvenience credit. Up to a $250 credit per traveler for carrier-related inconveniences, like cancellations, delays, and more.

• Travel insurance. Up to $100,000 in travel medical assistance, and up to $1 million in travel accident insurance.

• Rental car insurance. Up to $75,000 in car rental loss and damage insurance.

• Lost baggage insurance. Up to $1,200 per trip for lost checked baggage.

• Saks Fifth Avenue credit. Quarterly $250 shopping credit, up to $1,000 per year.

• Equinox fitness club membership. Access to clubs in multiple countries.

• Additional buying protection. Purchase protection, return protection, and extended warranty for goods purchased on the card.

• Personalized support. Access to personal shoppers and 24/7 personal concierge service.

Recommended: What is a Charge Card?

Pros and Cons of Using a Black Card

As a card that’s not intended for the masses, the card’s pros and cons highly depend on which side of the eligibility spectrum you fall under. Here’s a closer look at black credit card benefits and drawbacks:

Pros of Using a Black Card	Cons of Using a Black Card
No credit limit	Accessible by invitation only
Status symbol	High initiation and annual fees
Luxury perks	High spending requirement
Tailored service experience	High income requirement

Is a Black Credit Card Worth It?

With a reputation of having excessively high annual fees and high minimum spending criteria, an important credit card consideration for a black card is ensuring that you can afford it — that is, assuming you’ve received an invitation in the first place.

Weigh the black card benefits, and consider if you’d actually be using a credit cardin such a way that it would be worth it for your needs.

Recommended: When Are Credit Card Payments Due?

The Takeaway

Black cards are reserved for elite customers who have demonstrated the ability to spend thousands of dollars and repay that amount with ease. If you’re an everyday consumer or it’s your first time getting a credit card, a flashy black card probably isn’t a practical credit card solution.

FAQ

What does it mean to have a black credit card?

Being invited as a black card member means that you’ve met the card issuer’s underwriting criteria in terms of having a high income, high net worth, high spending activity, and more. It’s perceived as being a card that’s only accessible to the ultra-wealthy and elite.

How much does a black credit card cost?

Black credit card fees vary between card products but often cost hundreds to thousands of dollars in annual fees each month. The AmEx Centurion Card, for example, has a $10,000 initiation fee and a $5,000 annual membership fee thereafter.

Are black credit cards actually black?

Generally, black credit cards are designed with a black color scheme. However, some elite private banking cards that fall into the exclusive black card circuit aren’t black. For example, the JP Morgan Reserve card is made of brass and palladium, and has a silver metal finish.

What is the difference between a black card and a platinum card?

The AmEx Platinum Card is more accessible to consumers than the AmEx Centurion Card, also dubbed the black credit card. Members who want to apply for a Platinum Card can do so on their own online, while the black card is offered by invitation only. The requirements and annual membership fees of both cards also vastly differ.

Photo credit: iStock/Lemon_tm