Pitfalls: Worst Credit Cards!

Choosing the right credit card can be a daunting task, especially if you are new to the credit market. MSN Money compiled a list of the worst credit card deals for several types of cards:

1. Worst Retail Card- MACY'S CARD

Interest rate: 23.99%
(Cards from J.C. Penney, American Eagle Outfitters, Gap, Brooks Brothers, J. Crew and Dillard's all have rates of over 20%!)
Advice: If you really want a store credit card, get one that is affiliated with Visa, MasterCard or American Express.
Ex. A Banana Republic Visa has an interest rate of 14.24% while the store-only card has an interest rate of 21.9%.
Note: Retailers and Specialty stores don't tend to have great offers.

2. Worst Cash-Back Card- MONEY RETURN PLATINUM PLUS VISA FROM BANK OF AMERICA

Terms: 10% cash rebate (ONLY if you carry a balance!!) and the annual percentage rate for carrying a balance ranges from 9.99% to 19.99%.
So you pay almost 20% to gain back 10%. Does that really make financial sense?
Note: If you pay your balance in full, cards that offer cash rebates are usually a terrific deal.

3. Worst Subprime Card- CENTENNIAL GOLD MASTERCARD FROM FIRST PREMIER BANK

Interest Rate: 9.9%
Fees: * A one-time account set-up fee of $29.
* A one-time program fee of $95.
* An annual fee of $48.
* A $7-a-month servicing fee, which equals an additional $84 per year.
Ex. If you are approved for a $250 line of credit, you pay $256 in fees during your first year of card membership and only have $71 available credit your first month.

4. Worst Secured Card- NEW MILLENNIUM BANK SECURED GOLD OR PLATINUM VISA OR MASTERCARD PLATINUM

Terms of Platinum cards: * $59 annual fee.
* $99 processing fee.
* 19.5% (interest rate) for purchases and balance transfers.
* No grace period.
Terms of Gold Cards: * $20 to $40 annual fee.
* application processing fee.
Note: Even if you pay your balance in full every month, you'll still owe interest charges on anything you charge.

Note: Secured cards are often the most consumer-friendly option for many consumers seeking to build or rebuild their credit. But be careful which one you choose.

5. Worst Prestige Card- VISA BLACK CARD ISSUED BY BARCLAY'S BANK

Terms: * $495 annual fee.
* 1% cash-back or points plan
* concierge service
* access to airport lounges

6. Worst Marketing for an Otherwise OK Card- AMERICAN DREAMCARD MASTERCARD BY HSBC

* This card encourages you to spend so that you'll earn "entries" to win "large monthly cash jackpots!"
* These jackpots grow depending on how much people spend, and you can win more entries by encouraging your friends to get the card.
* Advertised as "the credit card program that can make people rich!"

What is the lesson here? Thoroughly research the credit card you are interested in before you apply! You do not want to be stuck with unfavorable terms that provide no benefits.

Stay Smart,
Savvy Student