Home > 2014 > Credit Score

What Credit Cards Should I Avoid?

Advertiser Disclosure Comments 0 Comments

Between television commercials, and advertisements on the Internet and in your mailbox, there is no shortage of information about credit cards. But when it comes to determining which one you should get, a pretty good place to start, when sorting through the hundreds of cards on the market, is to eliminate those you should avoid.

With so many different credit cards available, there are right and wrong cards for each different kind of credit card user. So first figure out what type of credit card customer you are, and then be sure to avoid these cards.

If You Carry a Balance

Between one-half and two-thirds of American credit card users carry a balance each month. This means that these cardholders are always incurring interest charges on their existing debt as well as on their daily purchases. Therefore, they should avoid the following kinds of cards:

  • Charge cards. Charge cards are used just like credit cards, but customers are required to pay their entire statement balance in full, every month, or they will be considered delinquent. This policy makes these cards unsuitable for those who plan on extending payment.
  • Rewards credit cards. Credit card rewards are great, but earning them is not in the interest of those who carry a balance. First, rewards credit cards will most likely have a higher interest rate than non-rewards cards, and the additional financing costs will likely exceed the rewards earned. In addition, those who are struggling with credit card debt do not need any additional incentive to spend more money.

If You Pay Each Month’s Statement Balance in Full

By avoiding all interest charges, cardholders are free to earn the most valuable rewards possible. Yet many of these cardholders continue to use the same cards, year after year, and they may no longer be competitive.

  • Cards that earn inferior rewards, or none at all. Cards that offer rewards worth a mere 1% of the amount spent are hopelessly outdated when there are currently several cards that offer 1.5 – 2% cash back on all purchases, while others feature up to 6% cash back at certain categories of merchants.
  • Cards that don’t offer a competitive sign-up bonus. If you are already earning competitive rewards from your cards, you can still apply for a new card and earn a valuable sign-up bonus. Current sign-up bonuses can be worth several hundred dollars in cash back, airline flights, or hotel award stays, yet credit card users are still tempted by store cards that feature a 10% discount on that day’s purchases. Since you can’t sign up for a new credit card at every store you visit, you may as well hold out for only the best offers.

If You Travel

Travelers use credit cards for their amazing security and convenience, but those who travel regularly have special requirements.

  • Cards without an EMV smart chip. Credit card readers that require an EMV smart chip have been deployed in Europe and other parts of the world for several years, yet most cards issued to Americans still fail to comply with that standard. This leaves many American travelers stranded when their card is rejected at train stations and gas stations. Thankfully, more and more cards now have smart chips available, so be sure to ask your card issuer if that is an option.
  • Cards that charge foreign transaction fees. It is absurd to pay a fee of 3% just to have a transaction processed outside of the U.S., yet that is a fee that most cards carry. Fortunately, more credit cards are being offered that do not have this fee. Many of these cards are high-end reward cards marketed to frequent international travelers, but some cards have an EMV smart chip and no foreign transaction fee as well.

Before you start shopping for a credit card, it’s helpful to know your credit score so you can target your search to cards for which you’re more likely to qualify for.  Having a higher credit score can help you get lower interest rates, but lenders also have credit score requirements for various credit cards. Credit.com offers a way to check your credit scores for free — they get updated every month, and come with an analysis of your credit report, as well as an action plan to help you get your credit in better shape.

More on Credit Cards:

Image: Creatas Images

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team