Credit Cards to Avoid

Credit cards are a good way to re-establish credit, but there are some credit cards to stay away from

Wouldn’t it be nice if all credit card companies were equal and looked out for the consumer’s best interest? The sad fact is that this is not the case and here is what to look out for in credit cards to avoid.

Credit cards are a good thing to have in some situations. They can get you out of a bind, help you establish credibility and increase your borrowing power if used correctly. But it is a jungle in the credit card business and in that jungle are some snakes. Here's a few things to totally avoid:

High Initial Fees

If a credit card forces you to have a balance before you even use the card, run away. Some of the worst credit cards will charge fees for everything from account set up fees to credit limit increase fees. Some of these fees can eat up to 50% of your available balance.

Non-Reporters

Read the credit application carefully and make sure the card you are applying for reports to the credit bureaus (Equifax, Transunion and Experian). Card issuers that do not report any activity, including positive activity, should be avoided at all costs. This type of card isn’t helping you establish credit or raise your credit score; therefore it is useless in that respect.

High Minimum APR

A card that has a high minimum APR (Annual Percentage Rate) is taboo for the consumer. Read the details thoroughly before you apply. Some credit cards may have a minimum APR in the double digits, which is crazy since the Prime Rate is currently about 7.75%. This means that you even if you make timely payments and don’t carry a balance, your APR could ALWAYS be at least 10.9% or higher. Not good, my friend. Not good at all.

Catalog or Store Cards

These are usually sought by people looking to re-establish credit. They are good in that respect, but for those already carrying major cards, these are a credit card to avoid. This type of credit card is only valid at a specific store or retailer, so your options are limited on where to use that card. Normally with higher interest rates and more than a few fees attached, these are not recommended for someone looking to extend their credit line.

Introductory Offers and Late Payments

Introductory offers can be very attractive. They’re supposed to be attractive by nature. You see a low rate and WHAM! You hit the apply button faster than a speeding bullet. This can be a big mistake.

Watch the length of the introductory offer. They can be as short as 30 days to as long as 12 to 15 months, depending on the card. What’s more, there could be a clause saying that if you are late one time during this period, the credit card issuer can repeal your introductory status, raise your APR significantly and slam you with fees of all types. READ THE TERMS BEFORE YOU APPLY!

In conclusion, credit cards to avoid will typically cost you more in a hurry. Less than scrupulous companies will lay in wait for unsuspecting consumers like a spider in a big web.

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