topic Re: Why is it normal for banks to issue cards without showing their terms first? in Credit Cards

Why is it normal for banks to issue cards without showing their terms first?

Anonymous — Tue, 13 Dec 2016 11:59:10 GMT

I find it bizarre that I can apply for a CC and then be accepted, without the chance to decline their offer. I mean, I know you can forfeit activation and close the account. But why is the account opened in the first place? When the bank checks your credit, they should just make an offer: based on your credit score, we can offer you [credit card X] with terms [Y] (APR, etc.).. and then you can accept or reject. I've read that BOA, but also CapOne, will even issue a different card than what was applied for...is that true? One applies for Capital venture and receives Capital Venture One (little brother of CV, if I understand it correctly)?

Re: Why is it normal for banks to issue cards without showing their terms first?

ilovelisa — Tue, 13 Dec 2016 18:33:53 GMT

I strongly agree with this. For example, someone may apply for the Walmart credit card and hope to get approved for the MasterCard with at least a $2,000 limit. However, they may only offer the store card with a $100 limit. You should be able to accept or decline the offer and have the hard inquiry stand.

Re: Why is it normal for banks to issue cards without showing their terms first?

Anonymous — Tue, 13 Dec 2016 20:16:02 GMT

1,000% agree. Earlier this year when I was just starting to rebuild, I went a little SCT crazy. I ended up with a Limited card with a $150 limit and a few others with $250 limits. I ever would have accepted them had I known the limit in advance and now I'm stuck with the AAOA hit. It's your credit, your account. You should absolutely be given the option to decline an offer you
don't want

Re: Why is it normal for banks to issue cards without showing their terms first?

Anonymous — Tue, 13 Dec 2016 20:23:00 GMT

Exactly. The mechanisms feels as follows:

- You show interest and apply for card X from bank Y
- This gives the bank Y license to shove anything down your throat just because you applied for card X

Re: Why is it normal for banks to issue cards without showing their terms first?

Anonymous — Tue, 13 Dec 2016 21:11:49 GMT

Thanks for posting this OP. I have thought about this too, and totally agree.☺

Re: Why is it normal for banks to issue cards without showing their terms first?

Anonymous — Tue, 13 Dec 2016 21:13:40 GMT

While I agree, remember it isn't much of an issue for "real" people. Since we agree that the HP is legitimate, we are only concerned about the AAoA hit. For the average person who might apply for a card every few years, even if they knew about the role AAoA plays, it wouldn't be a big factor.

Re: Why is it normal for banks to issue cards without showing their terms first?

NRB525 — Tue, 13 Dec 2016 21:15:04 GMT

But they do disclose the terms. They have a range of APR in their pricing sheet, clarify, if in small print that you may be given another card based on your credit profile and the decision of the underwriter if one gets involved. You agree to this uncertainty when you apply, there is an acknowledgement button you have to click that says, yes, you realize there is uncertainty in this application.

The main reason banks will not, can not do such an offer / decline system is that they are profit driven. Once they have your interest in a card, after all their marketing cost, they want you as a customer, they want to get their card in your hands. The costs of reducing customers, or customers not accepting the offer would be substantial.

And worst of all, if people had the option of declining the card cleanly, with no score impact other than the HP, there would be a whole new trend here, "application testing" where folks would apply for and decline a dozen cards throughout the year, pinging the banks for the "best limit". A nightmare scenario for the banks.

If you want the most assured way to increase your credit score, then only use the cards you have. After your score increases, better limits will be available. Good credit, a good credit profile, is built over years, not months.

Re: Why is it normal for banks to issue cards without showing their terms first?

Anonymous — Tue, 13 Dec 2016 21:24:19 GMT

@NRB525 wrote:
But they do disclose the terms. They have a range of APR in their pricing sheet, clarify, if in small print that you may be given another card based on your credit profile and the decision of the underwriter if one gets involved. You agree to this uncertainty when you apply, there is an acknowledgement button you have to click that says, yes, you realize there is uncertainty in this application.

The main reason banks will not, can not do such an offer / decline system is that they are profit driven. Once they have your interest in a card, after all their marketing cost, they want you as a customer, they want to get their card in your hands. The costs of reducing customers, or customers not accepting the offer would be substantial.

And worst of all, if people had the option of declining the card cleanly, with no score impact other than the HP, there would be a whole new trend here, "application testing" where folks would apply for and decline a dozen cards throughout the year, pinging the banks for the "best limit". A nightmare scenario for the banks.

If you want the most assured way to increase your credit score, then only use the cards you have. After your score increases, better limits will be available. Good credit, a good credit profile, is built over years, not months.

Just because they disclose it does not mean that is best practice. For instance earlier this year I applied for the Alaska Air card becuase I had a targeted 50k miles offer. BOA decided to give me a Platinum card instead of the Siggy which meant no bonus miles, no companion fare, and a terrible limit. In the end they ended up losing a customer forever due to their anti consumer policy. Even now that my overall credit limits and scores have improved I still refuse to do business with a bank like that. Chase will sometimes give applicants a Platinum card but they are still eligible for the original bonus that was promised, and will upgrade the cards to a Siggy later! Unlike BOA which was a complete waste of a HP and AAoA hit. In the end BOA would have saved money by giving me the option to decline, instead they had to mail out a card, and give me 5,000 bonus miles and I cancelled anyway therefore avoiding the Annual Fee. Sure there would be people that abused the system but it would benefit the consumer greatly.

Re: Why is it normal for banks to issue cards without showing their terms first?

Anonymous — Tue, 13 Dec 2016 21:34:22 GMT

I was referring to the terms of your actual offer, not the terms under which they consider you. Sure, they disclose APR may be 15% or may be 22%, the point is, to then make a concrete offer for you and allow you to deny, without average age of credit impact or you suddenly getting a tiny limit and different card than you applied for.

Regarding the point about "normal" people. A normal person might still at some point want to apply for a card or two, and let's say they're denied for 3 and still want/need one, so they do a fourth.. and get some **bleep**. So now they got a card they didn't want with some **bleep** limit, under **bleep** terms. That's weird.

The pre-qualification stuff somewhat helps this matter, but then again plenty of people seem to get a raw deal even though they supposedly were pre-qualified..even to the point of being denied.

Re: Why is it normal for banks to issue cards without showing their terms first?

SouthJamaica — Wed, 14 Dec 2016 04:04:20 GMT

@Anonymous wrote:
I was referring to the terms of your actual offer, not the terms under which they consider you. Sure, they disclose APR may be 15% or may be 22%, the point is, to then make a concrete offer for you and allow you to deny, without average age of credit impact or you suddenly getting a tiny limit and different card than you applied for.

Regarding the point about "normal" people. A normal person might still at some point want to apply for a card or two, and let's say they're denied for 3 and still want/need one, so they do a fourth.. and get some **bleep**. So now they got a card they didn't want with some **bleep** limit, under **bleep** terms. That's weird.

The pre-qualification stuff somewhat helps this matter, but then again plenty of people seem to get a raw deal even though they supposedly were pre-qualified..even to the point of being denied.

You make a good point. They don't usually give you the actual interest rate up front, and sometimes they pull a switch on the promo offer if you're not considered in their top-tier creditwise. I think you're exactly right that you should have an opportunity to decline if it's not at their lowest interest rate and if they don't want to give you the advertised promo.

I actually had something like that with Discover once; they were advertising a 0% interest rate for a certain period of time, and after reviewing my application they said they could only offer me a reduced 0% interest rate period, and they gave me the opportunity to accept or decline.

But usually it's what you say, they just send you whatever they feel like sending you.

Re: Why is it normal for banks to issue cards without showing their terms first?

kdm31091 — Tue, 13 Dec 2016 23:16:23 GMT

Your idea is nice in theory, but just wouldn't work with profit driven banks. It's similar to how US Bank used to provide a 1% Cash Rewards card to those who did not qualify for Cash+. You had no option to decline the Cash Rewards -- if that's what you got, it's what you got.

For "regular" people in the real world, it's probably a pretty nominal issue, considering they rarely apply for cards or pay much attention to various rewards. You are getting the HP either way. The AAOA ding only occurs when the account is approved, but again, if you are not constantly applying, it's not a big deal.

Banks want profit and customers. If you were able to decline every approved account that was not 100% up to your standards (including with APR), they would lose a lot of customers. That's just not going to happen, however nice an idea it may be in theory.

Capital One doesn't provide a Venture One if you're declined for a Venture, at least AFAIK. Never heard of that happening. BOA will sometimes give you a lesser version of the Alaska card, but such a fact is clearly stated on their application page.

Re: Why is it normal for banks to issue cards without showing their terms first?

Anonymous — Wed, 14 Dec 2016 00:16:37 GMT

@kdm31091 wrote:
Your idea is nice in theory, but just wouldn't work with profit driven banks. It's similar to how US Bank used to provide a 1% Cash Rewards card to those who did not qualify for Cash+. You had no option to decline the Cash Rewards -- if that's what you got, it's what you got.

For "regular" people in the real world, it's probably a pretty nominal issue, considering they rarely apply for cards or pay much attention to various rewards. You are getting the HP either way. The AAOA ding only occurs when the account is approved, but again, if you are not constantly applying, it's not a big deal.

Banks want profit and customers. If you were able to decline every approved account that was not 100% up to your standards (including with APR), they would lose a lot of customers. That's just not going to happen, however nice an idea it may be in theory.

Capital One doesn't provide a Venture One if you're declined for a Venture, at least AFAIK. Never heard of that happening. BOA will sometimes give you a lesser version of the Alaska card, but such a fact is clearly stated on their application page.

Right, but it still does not make that a good business practice.

Re: Why is it normal for banks to issue cards without showing their terms first?

Ghoshida — Wed, 14 Dec 2016 00:52:10 GMT

I agree with the general premise of the OP.

Banks can and should change the CC process more towards the instalment loan process.

Both are profit oriented.

And it's super easy to implement.

Screen 1: marketing info, including possible bonuses, fees and credit terms (range)

Screen 2: individual's info, asking permission to HP, disclaimer that marketing offer may not be met

Screen 3: show the offer (terms, limit, bonus etc) based on the HP. Ask individual to confirm

Screen 4: if confirmed, congratulate individual, show delivery info. Else thank you and see you later message.

In step 3, banks report HP. In step 4, if confirmed, banks open account otherwise no new account.

This is how I see auto loans etc happen. Why not CCs?

This will eliminate disgruntled customers, and the cost of opening an account that will be rarely used.

Re: Why is it normal for banks to issue cards without showing their terms first?

kdm31091 — Wed, 14 Dec 2016 01:00:40 GMT

@Anonymous wrote:
@kdm31091 wrote:
Your idea is nice in theory, but just wouldn't work with profit driven banks. It's similar to how US Bank used to provide a 1% Cash Rewards card to those who did not qualify for Cash+. You had no option to decline the Cash Rewards -- if that's what you got, it's what you got.

For "regular" people in the real world, it's probably a pretty nominal issue, considering they rarely apply for cards or pay much attention to various rewards. You are getting the HP either way. The AAOA ding only occurs when the account is approved, but again, if you are not constantly applying, it's not a big deal.

Banks want profit and customers. If you were able to decline every approved account that was not 100% up to your standards (including with APR), they would lose a lot of customers. That's just not going to happen, however nice an idea it may be in theory.

Capital One doesn't provide a Venture One if you're declined for a Venture, at least AFAIK. Never heard of that happening. BOA will sometimes give you a lesser version of the Alaska card, but such a fact is clearly stated on their application page.
Right, but it still does not make that a good business practice.

I get what you're saying. Just think it's unlikely to change.

Re: Why is it normal for banks to issue cards without showing their terms first?

elim — Wed, 14 Dec 2016 01:05:40 GMT

@Ghoshida wrote:
I agree with the general premise of the OP.

Banks can and should change the CC process more towards the instalment loan process.

Both are profit oriented.

And it's super easy to implement.

Screen 1: marketing info, including possible bonuses, fees and credit terms (range)

Screen 2: individual's info, asking permission to HP, disclaimer that marketing offer may not be met

Screen 3: show the offer (terms, limit, bonus etc) based on the HP. Ask individual to confirm

Screen 4: if confirmed, congratulate individual, show delivery info. Else thank you and see you later message.

In step 3, banks report HP. In step 4, if confirmed, banks open account otherwise no new account.

This is how I see auto loans etc happen. Why not CCs?

This will eliminate disgruntled customers, and the cost of opening an account that will be rarely used.

we have a winner

Re: Why is it normal for banks to issue cards without showing their terms first?

Anonymous — Wed, 14 Dec 2016 01:33:01 GMT

@Anonymous wrote:

Right, but it still does not make that a good business practice.

Perhaps not, but that's irrelevant as you are agreeing to their terms when you apply. NRB525 summed this up nicely on the last page of this thread.

If one doesn't agree with the terms of the contract (which states APR can be whatever, SL can be whatever, a substitute product can be issued, etc etc) then one can make the choice to not apply.

IMO, if someone has to worry about these issues in parenthesis above, they shouldn't be applying. Garden for another 6 months and then apply when your score/profile isn't "on the cusp" so that you get what you really want. If one can't hold out and apply at a time when their profile clearly supports the product they are apping for, they assume the risk that the product they are apping for won't be delivered on the best terms or at all.

Re: Why is it normal for banks to issue cards without showing their terms first?

elim — Wed, 14 Dec 2016 01:40:09 GMT

@Anonymous wrote:
@Anonymous wrote:

Right, but it still does not make that a good business practice.
Perhaps not, but that's irrelevant as you are agreeing to their terms when you apply. NRB525 summed this up nicely on the last page of this thread.

If one doesn't agree with the terms of the contract (which states APR can be whatever, SL can be whatever, a substitute product can be issued, etc etc) then one can make the choice to not apply.

IMO, if someone has to worry about these issues in parenthesis above, they shouldn't be applying. Garden for another 6 months and then apply when your score/profile isn't "on the cusp" so that you get what you really want. If one can't hold out and apply at a time when their profile clearly supports the product they are apping for, they assume the risk that the product they are apping for won't be delivered on the best terms or at all.

Pretty sure 90% of the population doesn't know these limiting factors to the tee (like we try to master here). One day someone will probably implement this, an HP will be required, and it will be a success.

Re: Why is it normal for banks to issue cards without showing their terms first?

Anonymous — Wed, 14 Dec 2016 01:41:47 GMT

Thanks for you opinion. My profile when I applied was scores above 700 on all 3 and included a Chase and NFCU card for $15,400 and $15,000 respectively so I had the reasonable expectation of getting the Visa Signature. My point is BOA is particularly terrible because they issue the other product without giving the bonus that prompted one to apply. I understand you are agreeing with the terms but it is still an absurd practice, and ended up costing BOA close to $150 dollars... ($50 Alaska Coupon + 5,000 Alaska Miles). They probably didn't pay face value for this but it still represents that by asking for my confirmation BOA could have saved themselves some money, and would not have made me want to avoid them for life.

Re: Why is it normal for banks to issue cards without showing their terms first?

Anonymous — Wed, 14 Dec 2016 02:02:21 GMT

I agree that CL and APR should be personally disclosed before a customer has to accept.

Re: Why is it normal for banks to issue cards without showing their terms first?

NRB525 — Wed, 14 Dec 2016 03:38:06 GMT

@Ghoshida wrote:
I agree with the general premise of the OP.

Banks can and should change the CC process more towards the instalment loan process.

Both are profit oriented.

And it's super easy to implement.

Screen 1: marketing info, including possible bonuses, fees and credit terms (range)

Screen 2: individual's info, asking permission to HP, disclaimer that marketing offer may not be met

Screen 3: show the offer (terms, limit, bonus etc) based on the HP. ~~Ask individual to confirm~~ Send to underwriting

Screen 4: if confirmed, congratulate individual, show delivery info. Else thank you and see you later message.

In step 3, banks report HP. In step 4, if confirmed, banks open account otherwise no new account.

This is how I see auto loans etc happen. Why not CCs?

This will eliminate disgruntled customers, and the cost of opening an account that will be rarely used.

And if after Screen 2, if the bank algorithm wants to route this decision to an underwriter (7-10 day or "we will let you know") for manual review, because the file is marginal (and thus may be likely to be offered the lower tier card, high APR, low CL) then what?