Angriest Rice Cooker Director’s Cut 72–On credit ratings
I’ve mentioned in several of these commentaries that at the time that I was writing these comics, I was working a lot. Specifically I was working in a call center taking credit card applications. That’s when I came up with this joke, not realizing that it’s kind of an old one. I’ve since heard this basic joke a bunch of times, and every time it makes me shake my head and sigh.
One upside of that little foray into the belly of the credit industry is it taught me a little bit more about what “pre-approval” means. Actually it’s a pretty brilliant and horribly frustrating use of ambiguity by corporations. See, what most people think when they see the phrase “pre-approved,” they assume it’s being used somewhat like the way rice cooker uses the word “pre-declined.” That is to say, they assume it means “We already went through the whole application process and we know you’re good–you’ve been approved before we sent you this letter.” It’s an added enticement to call: if you’ve already been approved, why not go ahead and accept the card? The companies do nothing to keep people from thinking this. On pre-approved offerers, they call the credit card application an “acceptance certificate,” even though it’s exactly the same as the application that non-pre-approved offers get.
You see, credit card companies can’t get all of the information that they need to actually get you a credit card until they get your application. Which is why “pre-approved” doesn’t mean what most people assume it means. What it actually means is something close to preliminarily approved. You’ve been approved to receive a credit card offer, in essence. The credit card company paid some money to one of the credit bureaus in order to get a list of names meeting certain criteria, probably involving credit score. People who meet these criteria are pre-approved and get the offer, which may or may not be available to anyone. It’s a deeply sleazy use of ambiguity
Still, generally speaking, the pre-approved offers were better deals than their non-pre-approved counterparts. Still, they aren’t necessarily the best deals available–if you are in the market for a credit card, I recommend doing the homework yourself at bankrate.com, rather than responding to offers you get in the mail. Credit cards can be very dangerous, but they can also be very useful tools, if you know how to use them. It’s actually a pretty big problem that people don’t get taught about how to deal with credit cards in school–these days, it’s practically a necessary survival skill.
Anyway, that’s my financial planning lecture for today
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