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

Most credit cards are decent. There are some exceptional options with great rewards and promotional interest rates. On the other end of the spectrum, some awful credit cards should be avoided at all costs.

The worst credit cards typically prey on consumers who’ve made some financial mistakes and may not qualify for anything better. Even if you don't have the best credit, you shouldn't accept a credit card with terrible terms. When you’re choosing a credit card, here are some features that qualify as the worst you could ever choose.

High Upfront Fees

A small number of credit cards charge initial fees to the credit card, even before you make a purchase. Read through the credit card terms, looking out for fees like 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 percent of 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.

No Credit Reporting

The worst credit cards won't help you build a better credit score. If you’re working to build or rebuild 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 your credit score. There are exceptions, however. Certain sub-prime credit cards do help you rebuild poor credit, and Milestone Gold Mastercard is one of the better ones.

Unreasonably High APRs

The worst credit cards come with a high APR, much higher than the rates of other credit cards. The majority of credit card APRs range from 0% (for a promotional rate) to 24.99%. The worst credit cards have regular APRs that exceed the penalty rate for many credit cards. Avoid any credit card with a regular APR of 30% or higher.

Qualifying for Better Credit Cards

Before you apply for a credit card, even a preapproved credit card, read through the credit card terms to find out the terms and conditions of the card. Compare the credit card pricing with other credit cards to get an idea of what credit cards typically charge. Choose a credit card with the most favorable terms for your credit standing.

If bad credit or no credit history is keeping you from getting approved for a card with better terms, consider getting a secured credit card to help boost your credit. 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.