Dealing with pre-approved credit card applications can be tricky

Topeka Capital-Journal, The, Apr 15, 1999

DEAR BRUCE: I read your column about pre-approved credit card applications and how people are sometimes turned down because they have too many hits on their accounts -- made by companies who want to send pre-approved credit card applications.

It looks like the chicken and the egg proposition to me. It happened to my mother, whose credit is otherwise impeccable. Do you have any suggestions? -- T.Z., Clinton Township, Mich.

DEAR T.Z.: It is likely that as long as people sell names to mailing lists, this practice will continue. A possible governmental solution would be a law preventing potential applicants' accounts from being assessed until they have accepted the company's offer. This would blunt the pre-approved selling method, but I don't see any other reasonable solution. DEAR BRUCE: I have noticed on many occasions your advice on not paying off home mortgages early and investing the difference. You advise the same thing for early repayment of student loans. I am in a position that all my loans are paid except for one very large one. The interest rate is plus or minus 8 percent. -- Dr. M., Fla. DEAR DR. M.: You posed a tough one only because the numbers are so close to what you can earn. As you know, the law has been changed so that the interest on student loans is deductible. Eight percent is a relatively low rate, and you have to figure that it has been reduced by your tax bracket -- probably by 40 percent or so -- so it is really only 4 and a fraction percent net cost to you. You would have to earn enough to offset your 40-percent tax bracket with money that you didn't use to pay the student loan off early. Only your track record in the market can answer that question. Send your questions to: Smart Money, P.O. Box 503, Elfers, Fla., 34680. E-mail to: bethlil@gte.net. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies can't be provided. Newspaper Enterprise Association