What are the worst credit cards?

Curtis Arnold
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Curtis Arnold
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I’ve often been asked during the course of covering credit card content the past 25+ years “what are the worst credit cards?” At one point, we actually used to publish a “hall of shame” article that got national media attention. I particularly got extreme gratification out of exposing cards that had egregious rates and fees.

While we have certainly tried to expose the worst credit card companies over the years, the angle of this article is related but unique. In reality, it’s fairly easy to spot a card with a really high interest rate and/or high fees. However, a more challenging scenario is to find the worst TYPE of card for an individual consumer based on spending habits, budget, etc.

The goal of this article is very practical. Simply put, it is my hope that by helping you avoid the worst kind of card based on your individual circumstances, that you will be able to easily find the best card for you. Doing so doesn’t have to be rocket science and can really help you benefit financially from using your card(s) wisely.

What is the worst credit card if you carry a high balance?

Most consumers are aware that if you have credit card debt (i.e. you don’t pay off your balance in full each month), then you should try to avoid a card with a high APR or interest rate. In short, you should try to get a low interest rate card instead.

However, few consumers understand how to define or identify a high APR as rates do change on a regular basis. Case in point, what was considered a high APR card a few years back before rates started going up isn’t now.

Beverly Harzog, credit expert and podcast host of “Your Personal Economy,” points out that the average APR has been very high for quite a while, so carrying a balance is expensive. Credit card expert Jason Steele suggests avoiding cards that have APRs in the 25-30% APR range. Focus instead on cards with lower rates, such as 0% intro APR credit cards. Be mindful, however, that cards with low rates generally require you to have a good credit score.

BONUS TIP!

There are decent alternatives to high APR cards even if your credit score is less than stellar. Harzog advises that if your score is too low to qualify for a low-rate card, then “consider a debt consolidation loan as you’ll most likely get a rate that’s lower than your card’s rate.”

Steele adds that “by law, a credit union card can’t charge more than 18% interest,” so consider applying for credit union membership if you’re not already a member.

What is the worst credit card for emergency use?

While I love using my 2% cash-back credit card as much as possible in order to maximize my rewards (I pay my statement in full every month), there are some consumers that only use their credit cards on occasion, such as when renting a car. In fact, many cardholders only use their cards on occasion, typically for financial emergencies.

If you fall into this category, I would argue that the worst card for you is one with a high annual fee. Harzog explains that some “credit cards charge an annual fee to cover the cost of offering rewards.” However, she notes that if you get a plain vanilla credit card with a low rate (i.e. no rewards program), it’s likely to be a no annual fee card.

One caveat is that if your credit is bad, it is often harder to avoid an annual fee. If your credit score is in the mid 600s or below, seek a simple or basic card with the lowest annual fee possible. Steele adds that “most card issuers offer a basic card like this.” Our list of the best cards for poor credit can help you comparison shop.

BONUS TIP!

Harzog encourages all cardholders to try and use their card at least once a month, if possible. This could be something as simple and inexpensive as buying a package of gum. She further explains that “if your card appears inactive, the issuer could lower your credit line/limit or even close your account.”

What is the worst credit card for someone who regularly travels abroad?

Travel to foreign countries is growing in popularity. United Airlines, for example, has recently seen a nearly 30% surge in travel to Europe compared to 2019 and a 10% increase versus last year.

While a trip to Paris does sound appealing, getting dinged with hundreds of dollars in foreign transaction fees by your card when you back home can ruin your vacation memories. According to my colleague Maryalene Laponsie, these fees are charged by some cards whenever you make a purchase in another currency -presumably to cover the card issuer’s cost to convert the price to your home currency.

Foreign transaction fees are charged as a percentage of the purchase price and can range between 1-5%. Needless to say, getting slapped with up to a 5% fee every time you swipe your card while enjoying the trip of your lifetime can add up quickly.

Fortunately, according to Harzog, there are excellent rewards cards that do NOT charge these fees. If your current card charges a fee (call to find out if in doubt), she suggests shopping for a travel rewards card that matches your spending patterns and, of course, one that is fee-free.

BONUS TIP!

Steele opines that it’s best to use reward cards that “earn transferable travel reward points, including Chase Ultimate Rewards, American Express Membership Rewards, Capital One Miles, Citi ThankYou Points, Wells Fargo Rewards, and Bilt Rewards. These points are worth the most when transferred to airlines and hotels and redeemed for high-value airline tickets and hotel rooms.”

What is the worst credit card for someone who wants to earn cash back?

Cash reward cards have been the most popular type of reward card for many years and are my personal favorite. These cards are a superb choice if you:

  • Charge quite a bit each month
  • Pay off your card in full each month
  • Are not interested in travel rewards

The worst cash-back card in my opinion is one that rewards you 1% cash back or less on purchases. The good news is that there are many cash-back credit cards that offer more than this – many of which don’t charge an annual fee.

Steele explains that “you want a card with a high [percentage] rate of cash back. There are several cards that now offer 2% cash back on all purchases, with no limits [on how much you can earn] and no annual fees.”

There are also numerous rewards cards that offer you up to a 5% rebate in categories that rotate each quarter. To best utilize these cards, Harzog advises that you “look at your budget and see where you spend the most money.” For example, if you cook a lot or have a big family, a card that offers 5% back on groceries might be a good fit.

BONUS TIP!

Harzog believes that the best way to maximize rewards is to use cards strategically. If you plan on flying in the next year or so, consider a travel rewards card. But you can also use a cash back card at the same time if it gives you a higher rebate on certain types of purchases. The trick is to use the right credit card at the right time.

Final thoughts

I sincerely hope this article has shed some light on the worst credit cards to have based on your individual preferences and spending habits. Sometimes the worst cards are fairly easy to spot. Certainly, you want to avoid cards that:

  • Have excessive fees
  • Poor customer service
  • Don’t report your payments to all three credit bureaus (reporting helps increase your credit score)

Harzog cautions that there are predatory lenders who prey on the financially vulnerable. Avoid cards that have monthly management fees and/or application fees, for example. The golden rule applies here- read all the fine print (terms and conditions, fees, etc.) so you know how much the card will cost you before you apply.

However, some traits of the worst cards are less obvious. Steele, for instance, explains that you want to “avoid cards that offer reward points, but don’t give you a clear idea of what you can redeem these points for, and for how many points. The worst cards advertise how to earn points, but not what you can redeem it for.”

Fortunately, we make the process of comparison shopping for the best credit card much easier since we do the research for you and help you avoid any potential bad apples!

author
Curtis Arnold
CardRatings Founder

Curtis founded Cardratings.com in 1998 and, in so doing, helped pioneer the concept of rating credit cards. He has been a nationally recognized expert in consumer credit for well over 20 years. He is the author of “How You Can Profit from Credit Cards: Using...Read more

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