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Instant credit card approval: What it really means

Summary

Does instant credit card approval mean you can use your card right away? Not necessarily.

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Are all “instant approval” credit cards truly offering credit in an instant — as in, right now?

Some do, and some don’t. While many department stores deliver credit within seconds, for others, “instant” means “check your mailbox in two weeks.”

Many so-called instant approval credit cards merely provide conditional approval to keep you satisfied while issuers pull full credit reports on you. Banks call this process “instant decision,” and it’s not as instantly gratifying as some would hope. You’re stuck waiting for your new plastic via snail mail, and once the card actually arrives, an additional layer of identity validation kicks in to protect banks and consumers from identity theft. The activation process involves calling from the home phone listed in the original application and verification of the last four digits of the cardholder’s Social Security number.

The banks and credit card issuers that are included within the CreditCards.com links for instant approval credit cards include only those that truly offer instant approval.

What ‘instant credit’ really means


Typically, “instant use” or “instant credit” accounts are offered by major retailers who want to invite consumers to make big-ticket purchases. Many private-label store cards provide this type of credit card with an extra incentive of getting 10 percent off the first purchase. As tempting as it may be, beware having too many of these cards, as they can adversely impact your personal credit score. Michael McAuliffe, president of Family Credit Counseling Service, says, “Every time you go into a store, they’re going to push their card. I discourage shoppers from accumulating retail credit cards because they tend to carry very high interest rates, and it’s an easy way to damage your credit score.” If you can’t pay off the balance of those retail cards right away, you’ll owe a lot more than you bargained for.

Before applying for an instant approval credit card, know your credit score. Most credit card issuers base their lending decisions on the FICO score, named for Fair Isaac Corp., which popularized the score. If your credit isn’t the best, go easy on applying for instant credit, since excessive requests for credit can degrade your credit score.

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