Should you avail of pre-approved loans, credit card offers?

Sarbajeet K. SenMoneycontrolIf you are one of the good customers of a bank, you might be getting periodic offers for pre-approved loans and credit cards through phone calls or emails.While these offers promise attractive terms, the question that would be arising on your mind is whether to go for these offers and if so, what are the things one should consider before agreeing to avail these offers.Banking experts believe that though pre-approved loan offers have their benefits such as swift approval in case you are in need, one should exercise caution while availing them.“Pre-approved loans and credit cards, if applied in time and as per the process, is the best way to get funds for urgent requirements since the disbursal is quick. Also, since the bank is willing to lend, borrowers can bargain for better rates and credit limits,” says Aadhil Shetty, CEO, Bankbazaar.com.You will get such offers only on fulfilment of certain criteria based on your past track record with the bank including debt repayments, income level and repayment capacity. Final disbursal, however, is at the discretion of the lender.“Getting a pre-approved credit card offer means that the credit card issuer has checked your profile and found that you meet certain eligibility criteria. However, your pre-approved card will be approved only when you meet the card issuer’s other credit benchmarks and annual income requirements,” says Naveen Kukreja, CEO & Co-founder, Paisabazaar.comKukreja says pre-approved credit card offers should be accepted only after comparing benefits with other cards. “Credit cards come with attractive reward points, cashback offers and discount programs. Therefore, opt for a pre-approved card only if it offers the highest benefit on your regular transactions. Make sure to check the interest rates, duration of interest free period, expiry of reward points and annual charges of your pre-approved card and compare them with its other cards available in the market,” he said.Pre-approved cards are good if it helps you to bring down your cost of transactions through cashback offers, discounts, reward points and other benefits. You should go for one whose reward points never expire or if they do, they have the longest expiry period. “If you already have a high debt on your existing credit card(s), then go for a pre-approved card that allows you transfer their balance at a lower interest rate. Avoid additional cards, pre-approved or otherwise, if you already have multiple credit cards and have difficulties in managing them,” says Kukreja.For availing pre-approved loans, Shetty says one must first analyse whether the debt is needed in one’s financial books. “First and most important, checking if there is really a need for loans at all. Then, it is important to decide on the loan amount based only and only on specific requirements and not simply for the reason it is being offered by the lender. Post this, one should clarify with the bank about the nature of the interest, particularly for home loans, whether it is fixed or floating. Checking the terms and conditions of products offered is one thing customers should always do,” Shetty said.