Editor's Choice Razzie Awards: Worst Credit Cards of 2010

Our annual Editor's Choice Awards highlighted the very best credit card deals of the year. However, we couldn't resist looking back on 2010's strangest attempts by credit card issuers to suck the cash from your wallet.

Highest interest rate

First Premier Bank built its brand by offering unsecured MasterCard accounts to consumers with damaged credit profiles and low FICO scores. Fill out an application, and you'd get a card with a $300 credit limit. It just happened to be preloaded with up to $270 in processing, enrollment and service fees. Consumer advocates and lawmakers hated cards of this kind so much, they campaigned for new Federal Reserve rules that capped initial service fees at 25% of a card's credit limit.

CEO Miles Beacom openly complained that the restrictions hurt his company's ability to help Americans rebuild their credit. Claiming the need to mitigate risk, Beacom launched trial offers for a new First Premier MasterCard with an astonishing 79.99% APR. We guessing the response hasn't been that strong, since the issuer reported laying off nearly a third of its employees during 2010.

Most hated

In 2010, prepaid debit card issuers started looking like geniuses. Retail banks drove customers away by closing branches and eliminating free checking accounts. Meanwhile, "unbanked" Americans loved the convenience of managing their debit accounts at 24-hour retailers, even when transactions came with steep service charges.

A small marketing company convinced the Kardashian family to endorse a prepaid debit card bearing fashion photos of Kourtney, Kim and Khloe. All the famous sisters really had to do was throw a splashy launch party, promise exclusive cardmember benefits to justify the high service charges, and cash the royalty checks.

By most accounts, the party was a huge success. Everything else about the Kardashian Kard failed.

Retailers buried the "Kard" among a throng of cheaper competitors. Parents' groups claimed the sisters didn't represent suitable role models for anything, especially responsible money management. Korean news animations portrayed Kim Kardashian shackling small children to lead balls of debt. Within days of its launch, the Kardashians cancelled the project. The issuing bank refunded fees and deposits to all 250 of the fans who had signed up for cards.

Least disclosure

In February 2010, new Federal Reserve rules forced lenders to start using straight talk in their credit card offers. Best Buy’s credit cards certainly don’t get straight to anything.

Best Buy offers two different cards: the Best Buy store card, issued by HSBC, and the Best Buy Reward Zone MasterCard, also issued by HSBC. But you have to search the Best Buy credit cards area of the Best Buy website to figure out what the details are. Plus for the Best Buy store card, they offer six financing alternatives that range from 6 months for purchases from $149 and up to 3 years with no interest for purchases from $899 and up if paid in full in that time. No mention of what the APRs are on those financing offers, though, if you don’t pay in full by the deadline.

The limited disclosure on the Best Buy credit cards page is even harder to read since they use gray type on a white background. It does disclose the variable rates for accounts “generated on or after” specific dates, all of which are different. As with all store-brand cards, the APRs are much higher than a regular card, beginning at 24.24 percent.

The Best Buy Rewards Zone MasterCard gives you the consent to electronic disclosures for the application, but there’s no Schumer Box to tell you the regular APR or default APR, fees, and other information you can routinely read on credit card applications. The FAQs section describes the application process and a link to the Reward Zone MasterCard customer care area… but that’s it.

As we usually advise, consumers should stay away from store-branded cards.

Most expensive way to rebuild credit

One credit card lender actually found a way to make First Premier MasterCard look like a bargain, while exposing every possible loophole in the Credit CARD Act. Two of Applied Bank's Visa cards tied for our editorial team's pick in this category, so you've got a choice of how you'd like to hand them your extra cash.

The Applied Bank Unsecured Visa Gold Card gets around service fee restrictions on its $300 credit limit cards by breaking annual membership charges into monthly installments of just $15. That's $180 annually, although they'll only charge $115 in your first year. If you're trying to rebuild your credit, you might tolerate a 29.99% APR until you realize that Applied Bank offers no grace period. Charges you might normally float to show card activity generate interest from the moment you swipe your card, not from three or four weeks later, like most credit cards.

By comparison, the 23.99% APR on the Applied Bank Gold Match Plus Visa looks like a better deal, until you read the fine print. To increase your credit line or upgrade your account, you’ll pay $100. If you need to expedite payment, you’ll be charged $12.95 for an “optional payment.” However, if you are going to be late with your payment – a $35 fee – the $12.95 fee will save you money.

Our favorite feature of this card is the disconnect between an application that claims "zero fraud liability" and a terms and conditions document that states, "you may be liable for unauthorized use of your account." Most credit card lenders have rediscovered how to differentiate themselves through outstanding customer service. Applied Bank just manages to assign a fee for many account interactions that cardholders often expect for free.