Be wary of instant approval

One thing to keep in mind when shopping for credit cards is that because the market is so competitive, some companies will go to great lengths to get you to sign up with them.

A gimmick that has been around for a long time now and remains successful is the instant approval credit card.

Normally, when you apply for a credit card, a proper review process takes place. The organisation you are applying with will take a look at your credit history and your financial situation, and then they will approve or decline your application.

With instant approval, the criteria you have to satisfy in order to gain approval are greatly reduced. Instant approval cards are often plugged at the point of sale of big retail stores, because this is where consumers are most tempted to sign up.

A big selling point for instant approval cards is often that they will give you an instant discount off a purchase you are about to make. Say you are buying $200 worth of clothes, you may get a $40 discount by signing up to the card.

Unfortunately, there are some things to be careful of when signing up to instant approval. You need to properly read the terms and conditions, or else you may be slugged with a hefty signup fee and other ongoing fees. The interest rate may also be high.

Remember also that it may not be great for your credit history to open a new line of credit. Credit assessors always look at the number of cards you have when compiling a credit report, and every additional card could be seen as an unnecessary risk.