8 Credit Cards That You Should Never Open
What’s in your wallet? Jeff Hoyt, a MoneyTips.com financial expert, sincerely hopes it’s not one of these credit cards.
What to look for in a credit card
The best credit cards offer lucrative rewards programs, concierge services, and other extra perks, but those incentives are far from common.
In fact, there are thousands of credit cards on the market, and some of them are downright awful. If you’re looking for a new credit card, it’s important to do your research to make sure you get the right one.
To help you save time, here are eight credit cards that you should avoid altogether. And here are ten times you should never, ever use a credit card for payment.
Worst card for cash back: Kroger REWARDS World Mastercard®
This card offers bonus rewards at Kroger and Kroger Family of Companies and 1 point per dollar everywhere else. The catch is that you need 1,000 points for $5 in free groceries, meaning you’re getting a 0.5% base rewards rate.
“The typical base rewards rate for any rewards card is 1%,” says Ben Luthi, a credit card writer for MoneyTips, “making this card particularly disappointing.” Instead, consider the Citi Double Cash Card, which offers 1% cash back on every purchase you make and another 1% cash back when you pay it off. Explains Luthi, “Effectively, you’ll earn a net rate of 2% every time you use the card.” Learn more about cash-back cards.
Worst card for travel rewards: SKYPASS Visa® Secured Card
It’s uncommon to find a secured card that offers rewards, but this one isn’t worth the trouble. The card offers 5,000 bonus miles with Korean Air after your first purchase, 1,000 bonus miles each year, and one mile per dollar spent.
That said, you’re required to put up a deposit equal to your credit limit as collateral, and the card charges a $50 annual fee. Plus, Korean Air doesn’t operate in the U.S., giving you few redemption options among its domestic partners. Even if you do fly Korean Air frequently, the minimum credit line of $300 doesn’t give you much room to rack up rewards.
“When considering a rewards card, make sure it offers rewards you can actually use,” recommends Mike Zaino, a financial advisor in Charlotte, North Carolina. See how to get a better credit card just by asking.
Worst card for gas: BP Credit Card
If you spend a lot at the pump, getting a gas credit card might sound like a good idea. That’s not the case with this card. First, you can only use it at BP gas stations. Second, after the first 90 days, the card offers just $0.10 off per gallon for every $100 spent. On the surface, that doesn’t sound terrible, especially if your vehicle has a big fuel tank. But all the rewards you earn are valid for a single use only, and you’re limited to 20 gallons.
The good news is that BP has a Visa credit card that offers much better rewards on gas and other everyday purchases. You’ll be surprised to learn what the credit card companies know about you.
Worst card for balance transfers: Arvest Bank Visa® Classic
It’s rare to find a credit card with no balance transfer fee, but Arvest Bank isn’t doing you any favors. The card offers a 4.90% intro APR on purchases, balance transfers and cash advances for just six months, which then jumps to a variable 13.90%, 16.90% or 20.90% APR after that.
“If you have good credit, you should have a good chance of getting approved for a card with a long 0% intro APR promotion,” says Luthi.
For example, the BankAmericard® Credit Card offers a 0% intro APR on purchases and balance transfers for 15 billing cycles, plus no upfront balance transfer fee. Find this and other top balance transfer cards here.
Worst card for rebuilding credit: Reflex Mastercard®
The issuer Continental Finance may offer this card to you on an unsecured basis, but depending on your creditworthiness, you may be required to put up a security deposit as collateral to get the card. Either way, it’s likely not worth it. Not only does it charge a sky-high 29.99% variable APR, but it also imposes a flurry of fees, including:
- An annual fee of $125 the first year, then $96 after that
- A monthly maintenance fee of $10 starting in year two
- An additional card fee of $30
“You shouldn’t have to pay outrageous fees because your credit isn’t in good shape,” says Luthi. “There are plenty of credit cards issuers that won’t take advantage of you in this way.”
You can check your credit score and see your credit report for free within minutes at Credit Manager by MoneyTips.
Worst store credit card: Big Lots Credit Card
Almost every major retailer offers its own credit card, but some are downright terrible. The Big Lots Credit Card is just one example. It offers no rewards program and no details on its special member offers. Its value is supposed to be promotional financing on purchases of $250 or more, but there’s a catch. Instead of offering a traditional 0% intro APR, it’s a deferred-interest plan.
If you don’t pay off the purchase in full before the promotion ends, you’ll owe interest—an expensive 29.99% variable APR—on the original purchase amount rather than the remaining balance. “Deferred interest means if you spend $500 and come up a dollar short, you’ll pay interest on the entire $500,” warns Zaino, president of TZG Financial. “That doesn’t seem fair, but that’s one way they get you!” Learn more about when to open a store credit card.
Worst card for small business owners: CorTrust Business Platinum Visa Credit Card
This card’s diminutive $9 annual fee is affordable, but it’s also baffling, considering the card offers no rewards and no special perks you can’t get elsewhere. You can upgrade to the bank’s rewards program, which offers 1 point per dollar spent, by paying a $19 annual fee. But there’s no information about how much reward points are worth.
“Get yourself a business credit card that you’ll be excited about using,” says Luthi. “The best business cards offer big rewards and features tailored to small business owners.”
Worst card for students: State Farm® Student Visa®
A handful of student credit cards offer decent rewards, but this one doesn’t belong on that list. You’ll earn 3 points per dollar spent on State Farm insurance premiums up to $4,000 annually, and 1 point for every $2 you spend elsewhere. As a college student, you’re not likely spending much on insurance products, if at all. Also, the base rewards rate is subpar, and there are no clear details about how much the points are worth.
Instead, consider the Journey® Student Rewards from Capital One®, which offers up to a clear 1.25% cash back on every purchase you make. Check out more of the best credit cards.