Avoid the worst credit cards of 2012

Monday, November 19th, 2012 By

A credit card frozen in a block of ice.

When it comes to the worst credit cards, some things are best left hidden in ice. (Photo Credit: CC BY/Paul Stocker/Flickr)

Credit cards are a financial example of a double-edged sword. One side of the blade can help rebuild your personal credit. The other cutting edge can absolutely ruin your finances for decades. Don’t sever your economic limbs. Don’t use any of these, the worst credit cards of 2012 according to a survey by Card Hub.

Worst credit cards for rewards: Visa Black Card

The Visa Black Card is a creation of Barclaycard US, and it is grossly overpriced with a $495 annual fee. Sure, you may get airport lounge access, but reward points only accumulate at the rate of 1 point per $1 spent.

“It’s obvious that the Visa Black Card’s pricing is one of the ways that Barclaycard US is trying to fool consumers into thinking they’re getting the Black Card they see their favorite musicians and actors flaunting.  They want you to think. ‘If it’s that expensive, it must be the real deal.’  However, the Centurion Card is rumored to have a $5,000 initial fee and a $2,500 annual fee.  Besides, its secrecy is part of its lore, so the fact that you can even apply for the Visa Black Card online or see commercials for it on TV should tip you off that it’s not the real deal,” said Card Hub CEO Odysseas Papadimitriou.

Worst credit cards for big-ticket buys: Arvest Bank Classic Credit Card

This card offers a 4.9 percent, 6 month introductory rate on new purchases, after which time the 17.9 percent APR sets in.

“There are simply too many credit cards out there offering 0 percent introductory APRs for well over a year to even consider a card whose intro rate is nearly 5 percent and lasts for only six months,” said Papadimitriou. “In fact, the average 0 percent credit card offers that rate for over 10 months. This card’s inferiority is best illustrated when you compare it to the likes of the Citi Diamond Preferred and Citi Simplicity cards, both of which offer 0 percent on new purchases for 18 months.”

Worst credit cards for balance transfers: UBS Preferred Visa Signature Credit Card

Another card with a horrific $495 annual fee, the UBS Preferred Visa Signature card starts at a 9.99 percent introductory balance transfer APR for six months. It also charges a 3 percent balance transfer fee, however.

Worst credit cards for rebuilding credit: First Premier Bank Gold Credit Card

Don’t slip up at all with this card and carry a balance long-term. The APR is 36 percent; the initial processing fee is $95; the annual fee is $75 for the first year and $45 each subsequent year; and the second year begins with a $6.25 monthly fee. Plus, there’s a 25 percent fee for every credit limit increase. That’s a horror show waiting to happen, not a good path toward credit repair.

Worst credit cards for students: U.S. Bank College Visa Credit Card

No rewards, no low introductory rates and a regular APR of up to 20.99 percent make for a very unfriendly student credit card.

“Students are in a unique position to get more attractive credit cards than they deserve based on their credit standing since banks value their high earning potential and the years of financial independence they have ahead of them,” said Papadimitriou. “By applying for the U.S. Bank College Visa Credit Card, they would therefore be throwing away a lot of value.”

Worst credit cards for rewards: U.S. Bank FlexPerks Select Rewards Visa Business Credit Card

Think 1 reward point for every $1 spent is tiny? Try 0.5 points (far below the average of 1.08) per $1 spent, plus an initial bonus of 5,000 points that lags behind the average of 9,470 for other rewards credit cards. U.S. Bank isn’t too eager to reward its customers with this card.

Worst credit cards for small business funding: Pick a business credit card, any business credit card

Thanks to the somewhat toothless Credit CARD Act of 2009, there is a loophole for business credit cards. As such, they are not required to toe the line when it comes to tinkering with interest rates in relative secret. Small business consumers end up paying much more. Some banks have tried to do better, but ultimately, one wonders why a cost-conscious small business would choose any business credit card over a simple consumer credit card.

“Certain issuers, namely Bank of America, have proactively applied all CARD Act protections to their business credit cards, which makes them at least suitable for funding,” noted Papadimitriou. “However, since there are far more applicable general-consumer credit cards and using one won’t increase a small business owner’s personal liability, you can get far better terms by using a 0 percent general-consumer card for funding and a rewards business credit card for everyday expenses that you pay for in full within each month.”

Sources

Ask Men

Business Insider

Card Hub

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