Credit Card Center Credit Cards to Avoid | Credit Cards to Avoid |
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Credit cards are a good way to re-establish credit, but there are some credit cards to stay away from.
Credit cards are a good thing to have when used properly. They can get you out of a bind by serving as a temporary emergency fund, help you establish credibility and credit history, serve as a security barrier when purchasing online, give you an interest-free 30 day loan 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 and annual fees. Some of these fees can eat up to 25% of your available balance if you’ve got a low credit limit and are just starting out. 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 4.75%. 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. Look for a card that is no higher than 9% APR. Find one here. 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. Watch out for the clause saying that if you are late one time during this period, the credit card issuer can raise your APR significantly and slam you with fees.
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