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Dr. Brian Blank Shares Expert Opinion on Instant Approval Credit Cards on

9-5-18 - By

Instant approval credit cards are both quite real and a big hoax. On the one hand, you could be instantly approved for any credit card that you apply for online (some offers are from WalletHub partners). It all depends on how well you satisfy a card’s approval requirements. If you’re the exact type of applicant a credit card company is looking for, you will likely receive instant approval. So you have to focus on cards that are suitable for your credit standing. And the higher your credit score is, the more instant approval credit cards there will be. consults a panel of experts, including Dr. Brian Blank, Assistant Professor of Finance, to help people determine which, if any, instant approval credit card is right for them.

WalletHub: How do credit card companies decide whether or not to “instantly approve” an online applicant?

Blank: Most companies are seeking to generate profitable businesses, including credit card companies which develop processes to determine the types of applicants generating value for the firm. As a result, applicants who fit these profiles are approved. In many instances, credit card companies benefit from customers accumulating balances and paying interest on prior purchases. If credit card companies expect an individual to repay, hopefully with interest, they are likely to approve the applicant. Applicants with higher credit scores are more likely to repay and are thus more likely to be approved. As a result, you can typically see how likely you are to be approved by reviewing your credit report.

WalletHub: When does it make sense to worry about getting instant credit card approval?

Blank: As long as you are monitoring your credit report for accuracy, you need not worry, because the credit card company is reviewing that same information. Regardless of whether you are instantly approved, individuals should be interested in obtaining credit cards that offer the most value. Whether the card instantly approves them or not is only relevant if the individual would benefit from the card. Benefits vary widely, so you should consider how you use credit cards before selecting the best one.

WalletHub: If a credit card applicant is not approved instantly, what should he or she do while waiting to hear back?

Blank: What steps you should take depend upon your goals, so you should seek the best card for you when selecting one. If you are not in a hurry, do not worry while waiting. However, if you need a card by a certain point in time for a specific purchase, you can follow up with the credit card company or find an alternative in a timely manner. Specifically, you should look to minimize your payments when using credit cards, so if you carry a balance on credit cards, even if occasionally, then identifying the most favorable interest rate is important.

In general though, I recommend individuals not carry credit card balances if possible, due to the relatively high interest rates. As a result, when seeking credit card options, I look to maximize rewards that I receive (e.g., Cash Back or Airline Miles). In particular, I use cards that offer 5% cash back for particular types of purchases (e.g., Gas Station, Restaurant or Amazon) as frequently as possible. While 5% may seem small, keep in mind that this return is greater than almost any savings account interest rate. Finally, sometimes it may be worth paying annual fees for particular benefits, but you need to be sure you will use the card enough for the perks to justify the fees. Comparisons of credit cards are widely available, so you should research your spending habits and credit card options available prior to your decision.

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