Do you really need that new card?

Do you really need that credit cardBefore you sign that pre-approved premium credit card application that showed up in your mailbox recently, think twice about whether you really need another creditor.

Recently, many Canadians received applications in the mail for premium, "pre-approved" credit cards. Credit card companies have been purchasing credit information, then sending these pre-approved credit card applications to people who did not request them or who cannot afford them. The Canadian Federation of Independent Business conducted a survey and discovered more than one in five of all Canadian credit cardholders have received a pre-approved credit card application in the mail.

What should you do if you receive one of these applications in the mail and you are not interested in a new credit card? You should cut up the application into small pieces before you throw it away to keep identity thieves from accessing your information, suggests R. Mak in an article on the blog Fair Loan Rate. You also can contact the Canadian Marketing Association and request that your name be removed from mailing lists.

Studies published by the Canadian Federation of Independent Business have shown that these types of marketing strategies are targeting low-income people and the elderly. If you receive a pre-approved premium card application, think carefully before applying for it.

In almost all cases, these applications are sent to people who already have a credit card. Is it really necessary to have more than one credit card? If the rate is substantially lower than your present credit card, try negotiating with your current credit card company to get a lower rate. Tell its representatives about the offer you just received and see if they will match it.

In light of the current credit crisis, it seems odd to entice people deeper into debt with pre-approved credit card applications. Yet that is how credit card companies make their profit. Proceed with caution. When someone has more than one credit card, he or she is more likely to miss payments or spend over their limits.

So, before you sign that pre-approved premium credit card application that showed up in your mailbox recently, think twice about whether you really need another creditor. 

Article written by Christopher Ibotrain

Updated July 10, 2009

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