The Worst Credit Cards of 2013
Last update: Nov 1, 2013
Ghouls, goblins, vampires and…credit cards? That’s right, having the wrong plastic in your wallet this Halloween could be even scarier than the best haunted house on the block. The reasons why are simple.
For starters, the best credit card offers are about as attractive as they’ve ever been. In an effort to garner the business of consumers with above-average credit scores, banks have been offering increasingly lucrative initial rewards bonuses and 0% introductory APR deals ever since the end of the Great Recession. While the value of these offers appears to have peaked, according to CardHub’s latest Credit Card Landscape Report, you can still get an initial rewards bounty of up to $400 or 0% interest for the first year and a half that your account is active. The benefits don’t stop there either, as the regular APRs and ongoing rewards have also improved as a result of the rebounding economy and fierce competition in the credit card industry.
In other words, picking the wrong card is tantamount to skipping the house that gives out King Size candy bars on All Hallows’ Eve.
When characterizing the impact of a bad credit card, you also have to consider just how rough the past few years have been and how beneficial a few hundred dollars in rewards and/or a respite from interest would be. Not only is unemployment still high, but we are also on track to end 2013 with $41.2 billion more credit card debt than we began it with, after adding nearly $82 billion to our tab in the previous two years.
So, in order to help consumers avoid making scary credit card choices this year, we at CardHub compared more than 1,000 credit card offers and identified the cards to avoid in seven different key categories:
Worst Credit Card for Rebuilding Bad CreditIn addition to a 36% interest rate, this card charges a $95.00 processing fee prior to account opening, a $75.00 annual fee during the first year, a $45 annual fee in each subsequent year, a $6.25 monthly fee beginning in the second year, and a 25% fee for any credit limit increase. By comparison, the Harley-Davidson Secured Credit Card can be free to use.
Worst Credit Card for StudentsThe U.S. Bank College Visa Credit Card doesn’t provide any rewards or low introductory rates and students may end up with a regular APR as high as 20.99% APR – one of the highest rates among student cards. For context, the Journey Student Rewards Card from Capital One offers 1.5% cash back across all purchases, while the BankAmericard for Students offers 0% on new purchases for the first 15 months, and neither charges an annual fee.
Worst General-Consumer Credit Card for RewardsDespite the best efforts of Barclaycard US, you shouldn’t confuse this Black Card with the famed Centurion Card from American Express. While the latter is a status symbol and pop culture staple, the former is just a grossly overpriced attempt to capitalize on the social cache of the “black card” name. In return for paying a $495 annual fee, cardholders get 1 point per $1 spent, airport lounge access, the vague promise of luxury gifts, and the opportunity to earn 25,000 bonus points if they can manage to spend at least $1,500 during the first 90 days. Those terms might seem decent, but there are a variety of cards available that offer more lucrative rewards bonuses, higher ongoing rewards earning rates, and airport lounge access for hundreds of dollars less each year.
Worst General-Consumer Credit Card for Big-Ticket PurchasesOffers a 4.9% introductory interest rate on new purchases for 6 months and has a 17.9% regular APR. Even if you have the credit standing required to get Arvest Bank’s Gold or Platinum offers – which also have 4.9% intro rates for 6 months, yet charge 13.9% and 10.9% regular APRs, respectively – you’d still be sacrificing a lot of value relative to the various cards on the market that offer 0% on new purchases for 15-18 months. Any card with an introductory interest rate might at first seem attractive, but the disparity that exists on the market among specific intro rates, intro terms, and regular rates means that consumer costs can vary widely if one does not choose their card wisely. As a result, we used CardHub’s credit card calculator to compare credit cards with introductory rates to see how much each would cost a consumer who is trying to pay off a $1,000 purchase over two years. All three of the aforementioned Arvest Bank credit cards were among the most expensive offers out of the more 400 cards that we considered in this category.
Worst General-Consumer Credit Card for Balance TransfersOffers a 9.99% introductory balance transfer APR for 6 months and charges a 3% balance transfer fee as well as a $495 annual fee. For the sake of comparison, the Slate Card from Chase offers 0% on transferred balances for 15 months and charges neither a balance transfer fee nor an annual fee.
Worst Small Business Credit Card for RewardsWhile this card doesn’t charge an annual fee, it doesn’t offer rewards or low introductory interest rates either. Small business credit cards are known for their business-oriented rewards programs (which are often lucrative enough to warrant paying an annual fee) and business owners who opt for the First Hawaiian Bank Business MasterCard are forgoing an opportunity to earn a lot of free money. By comparison, the Ink Plus Business Card from Chase offers 50,000 bonus points when you spend $5,000 during the first three months, 5 points per $1 spent on office supplies and telecommunications services (up to a $50,000 spending limit in those categories), 2 points per dollar spent on gas and hotel reservations (up to a $50,000 spending limit in those categories), and 1 point per $1 on everything else. It does not charge an annual fee during the first year ($95 thereafter).