UPDATED: April 5th, 2012
When it comes to getting like a new credit card (whether unsecured or secured credit cards) very few of us have a lot of patience. Perhaps it is our ‘we want it now’ attitude that makes instant decision credit cards so popular as opposed to others. And you know what, there’s nothing wrong with that, as long as you’re balancing your spending well.
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What exactly is the difference between the instant decision card or the easiest credit card to get and the ‘others’? Applications for an instant decision credit card are designed to be quick and easy. There are very few criteria, the credit card company has little concern if you can actually afford the credit card, their primary concern is that you have a good credit score and have an income. If you don’t meet their basic criteria you may be declined on the spot. If there are grey areas in your application they won’t give you an instant approval, you’ll be asked to wait for days, weeks or even up to a month to be contacted by their team for further information.
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Applications for the ‘other’ credit cards, usually done directly through your bank are a little more involved. You will notice there are a lot more questions on the application form relating to your income and your current financial liabilities and commitments. Just because you earn $50,000 a year does not necessarily mean you can afford the credit card if your income is already committed to other things – bills, child support, loans, mortgage or other credit cards. Of course they consider your credit score; however it is necessary for them to be completely satisfied with all areas of your application before they will proceed. While it may not be an instant answer, if your application is sound you may get an approval within a week.
Because of the supposed convenience of instant decision credit cards you may find they use this as reason to charge higher interest rates and/or charge higher account fees. They know people can be impatient when it comes to obtaining money so they use this to their advantage. If someone sitting at home has the choice between one credit card that will get approved instantly and charge 20% interest, and one credit card that will take a week to get approved but will charge 17% interest, unfortunately most people will choose the instant approval option. The small increase in interest seems insignificant at this stage, but it won’t when the interest charges start adding up over the coming months.
With that said, there is a time and a place for such convenience. Certain emergencies can be helped by the quick influx of money, medical bills, urgent home maintenance etc. There are times when you simply cannot wait for a week and at these times an instant decision credit card may be right for you. But just because you have the credit card now, it does not mean you have to keep it. Once your financial emergency has been dealt with, whether you are a student trying to find the best college student credit cards or a hardworking individual, make an appointment at your bank to discuss transferring the balance of that credit card to another with a better interest rate or lower fees. Now you have more time on your hands to shop around you should be able to find a better deal. This way you’ll get the best of both worlds – quick money and a competitive credit card.
Instant decision credit cards certainly have their place in our society. They can be incredibly helpful at times but unfortunately they can also be incredibly detrimental to our financial states. Always make decisions about accepting credit carefully; it can be the start of a very slippery downward slope if not managed carefully and sensibly. If you are not sure you are making the right decision or not then speak to a financial or budget planner or even your banker before going ahead.
You can check out a variety of instant decision credit cards
on our featured credit cards page.