preapproved credit cardWhen you open your mailbox and discover that you’ve received a preapproved credit card offer, things can get exciting. Before responding to it, there are several things that you’ll want to consider so you can make sure it’s the right offer for you. Keep reading to find out what you’ll want to be aware of before taking action.

You still need to apply for the card

One point to keep in mind is that a preapproval doesn’t mean that you can automatically get the card. If you receive a preapproved credit card offer and want the card, you’ll still have to apply for it, as the preapproval means you’re at the step before an approval. Furthermore, even if you’re preapproved for the credit card, your application for the card could still be denied. That’s because credit card issuers extend preapprovals based on limited criteria (for example, issuers may just obtain lists of consumers who have credit scores that fall into certain ranges, and then extend offers to those consumers). This means that when they give out preapproved credit card offers, they don’t factor in all the variables that creditors would evaluate when reviewing credit card applications, like your income, debt-to-income ratio, credit history, credit utilization ratio and more. As such, since the extension of these offers is often decided based on initial (and insufficient) criteria, it’s possible for your application to be rejected even if you’re preapproved for the card.

The relation between preapproved credit card offers and credit scores

When you receive a preapproved credit card offer, one question that may have crossed your mind is whether or not this offer impacts your credit scores. Luckily, when you receive a preapproved credit card offer, your credit scores aren’t dinged because the information used for a preapproval is information that’s accessible via a soft inquiry, which doesn’t impact credit scores. That said, you’ll want to keep in mind that your scores will be impacted when you apply for the credit card (and redeem the offer), since that would result in a hard inquiry.

Check the terms in the fine print

When you get the preapproved credit card offer, you’ll want to familiarize yourself with the card’s terms by reading the credit card agreement. By doing so, you’ll be able to understand exactly what the card offers you so there are no surprises in the future (a practice that’s good to carry out for any cards that you plan on applying for or any that you have in your wallet). Furthermore, you would be able to note any expiration dates for the offer — something you’ll want to keep track of if you plan to take advantage of the offer by applying for the card. After all, it could be really disappointing if you end up applying for the card to take advantage of certain rewards and features, but then end up with completely different rewards and features. To learn more about reading fine print and credit card agreements, you can follow our guide to deciphering credit card agreements.

There could be better credit card offers

After knowing the terms in the fine print inside out, you’ll want to confirm there are no better credit card options available. When you see a preapproved credit card offer that sounds great, it may be hard to believe that you could get a different card that’s a better fit — or even the same card with better terms elsewhere, but it’s something that happens. For example, you may get an offer for a balance transfer card with a 15-month 0% intro APR, while the card issuer’s site may be offering an 18-month 0% intro APR. It’s not common, but it could happen. As such, you’ll want to do as much research as possible before putting the hammer down and applying for a card. To get started on discovering new cards and comparing them, take a look at our credit card reviews.

Shred preapproved credit card offers if you’re not going to apply

If you’ve decided that you’re not going to take advantage of the preapproved credit card offer, don’t just throw it straight into the trash if it arrived as a hard copy. These offers can contain all sorts of personal information that you wouldn’t want identity thieves to get their hands on — and they have been known to go dumpster diving. With such information, a criminal can open the preapproved offer under victims’ names, impersonate them and even target a victim for scams. That’s why it’s best to shred all the materials that came with the preapproved credit card offer. We suggest using a cross-cut shredder or micro-cut shredder, since these destroy your materials more effectively than strip-cut shredders. A good rule of thumb is to shred anything with your name, address or other personal information on it.

Now that you know more about what you should consider when you receive a preapproved credit card offer, check out our credit cards blog to learn more about picking the right card for your needs and spending habits.