Features of the Worst Credit Cards

Types of Credit Cards You Should Avoid

A woman sits across from a huge credit card
© Stephen Swintek / Stone / Getty

It’d be nice if every credit card offered provided an equal amount of benefit to consumers as to the credit card issuer itself. However, nothing could be further from the truth. While there are some good credit cards, there are many that prey on unsuspecting consumers who’ve made some financial mistakes. Fortunately, these credit card issuers aren’t so good at hiding their unfair tactics.

Three Features You Never Want in a Credit Card

When you’re choosing a credit card, here are some features that qualify as the worst you could ever choose.

  • Credit cards with high initial fees that are charged even if you never make a purchase. Watch out for credit cards with fees such as account set-up fees, program fees, participation fees, fees for additional cards, and fees for credit limit increases. New Federal rules say these subprime or "fee harvester" credit cards can't charge more than 25% if your initial credit in fees. That's still a high price to pay just to have a credit card and it's a fee you should think twice about paying.
  • Credit cards that don’t report your payment status to credit bureaus. The worst credit cards won't help you build a better credit score. If you’re working to build or re-build your credit history, a credit card that doesn’t report to the major credit bureaus won’t be any good to you. Since the payment history for that card won’t appear on your credit report or in your credit score calculation, your positive payments don’t do any good to help you build a positive credit history.
  • The worst credit cards come with a high APR. For awhile, there was a credit card that offered a 60% APR. To put it in perspective, the average rate for a bad credit credit card is 25% and the average rate on a low interest rate credit card is 11%. That credit card's 60% APR has been lowered to 50%, but it's still unreasonably high and an example of a credit card that you always avoid.

    Qualifying for Better Credit Cards

    Before you accept a credit card, read the disclosures to find out the terms and conditions of the card. Compare with various credit cards and choose the credit card that has the most favorable terms.

    If bad credit or no credit history keeps you from getting approved for a card with better terms, consider getting a secured credit card. A secured credit card requires you to make an upfront deposit to secure your credit limit. Once approved, you can use the credit card like any other credit card. When your timely payments are reported to the credit bureaus, your credit improves, making it easier to qualify for a better credit card offer.

    Use a secured credit card for about 6 to 12 months to improve your credit so you can qualify for an unsecured credit card with favorable terms.