Sunday, November 14, 2010

How did I get approved for this credit card?!?

I was just approved for the American Express庐 Preferred Rewards Gold Card.

Supposedly, you need EXCELLENT CREDIT to be approved, but I have NO CREDIT HISTORY at all (I'm a college student, never had a credit card).

I applied online and I received an email about 6 hours later saying I was approved and that my card would be mailed in 7-10 days.

What's up with this?!? Am I just lucky, and will this help get my credit score high faster than if I started out with low credit credit cards?

ThanksHow did I get approved for this credit card?!?
You didn't get approved for the card - yet.

Credit Card companies buy lists from the credit bureaus. The list will contain people who's credit scores are at or above a particular score. Then they do a mass mailing to everyone. They don't really look at you in detail unless you submit an application! THEN, you *may* be approved.

In any direct mail campaign, a 5% response rate is considered good. So, they expect 95% of the ';pre approved'; offers they send to end up in the shredder.

Shop around. If you have a good history, you should be able to get a card you don't have to pay for.How did I get approved for this credit card?!?
Be a little wary. It is possible they approved you for a card, but not necessarily the card advertised.

Pay close attention to the documentation that arrives describing the terms of the card. Make not of the interest rate, fees, penalties and the such.

Credit can be a very useful tool when paid off every month, however, it can also be very dangerous and someone could find themselves deeply in debt before they even realize it.

You need to resist the tempation to purchase items and service that you cannot really afford or would not have purchased if you did not have the credit card.
You do know that card has a $130 annual fee, right?

And that you CANNOT carry a balance on it, but MUST pay the entire amount due each month when the bill comes in?

If you are legitimately approved for one, and can use it wisely, yes, this is a good thing. Read all the fine print carefully, though, and make sure you don't violate the terms of your agreement. Starting off your credit history by having an account closed by the lender is *not* a good way to build good credit.
Credit card companies LOVE college students. Their theory is the students will go crazy charging large amounts, not be able to pay, so the rich parents will pay it off to keep their soon - to - be graduate not have a tarnished credit record. They know exactly what they are doing.
AmEx is one of the harder cards to get. However, they really don't have a problem with no credit, it is if you have bad credit you will get declined. Like most other cards they also market to students. So the fact that you are a Student with no credit is the reason you got the card. I wouldn't call you lucky, but if you mismanage your account you can be unlucky.

First realize that yes they did waive the Annual Fee for the 1st year. But this means you are still going to have to pay $130(or what ever the current fee is) for every year after this. This will have to be paid when it is assessed, so as next year rolls around you need to be sure that you can afford that along with any other purchases you have made that month.

Also, be sure you totally understand the ';Extended Payment Option';. It is not automatic, you must enroll in it. The EPO does not take effect when your BALANCE goes over $200, it ONLY applies on any single purchase that is over $200. So if you make 10 purchases for $50 each, you are going to owe the entire $500 at the end of the month. Now if you made 2 $250 purchases those would be eligible.

Your credit history is built on how you manage your accounts over time. Ideally you should use this for regular purchases. These are ones that you would pay cash for anyways. Then at the end of the month pay the balance in full. You won't build your history any faster by carrying a balance. So starting off your financial history by getting in the habbit of carrying debt is not a good plan in the long run.

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