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

New Contributor

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

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)?

Message 1 of 68
67 REPLIES 67
Established Contributor

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

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. 

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Message 2 of 68
Frequent Contributor

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

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
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Message 3 of 68
New Contributor

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

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

Message 4 of 68
Senior Contributor

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

Thanks for posting this OP. I have thought about this too, and totally agree.☺
Current Scores: EQ 679;TU 647; EX 679 Gardening since 11/7/18
Beginning Scores-- EQ 632; TU 576; EX 619 FICO 08 (06/13/16) - BK7 discharged 11/2015
Message 5 of 68
Mega Contributor

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

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.

Message 6 of 68
Super Contributor

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

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. Smiley Happy

High Bal Jan 2009 $116k on $146k limits 80% Util.
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Message 7 of 68
Valued Contributor

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


@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. Smiley Happy


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. 

Message 8 of 68
New Contributor

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

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.

Message 9 of 68
Super Contributor

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


@Plwtcred 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.

 


Total revolving limits 653000 (575000 reporting)

Message 10 of 68
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