Selected by WalletHub Editors from 1,000+ credit cards — Updated September 21, 2017
This content is not provided or commissioned by any issuer. Opinions expressed here are the author’s alone, not those of an issuer, and have not been reviewed, approved or otherwise endorsed by an issuer.
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 one thing, the best credit card offers are about as attractive as they’ve ever been. Initial rewards bonuses have recently stabilized near historical highs, according to WalletHub’s latest Credit Card Landscape Report, with the average cash-based sign-up incentive more than quadrupling in value since 2010 and point/mile bounties doubling over that same timeframe.
Furthermore, we’re once again racking up balances by the billion. The way things are currently looking, we will end 2017 with roughly $150 billion more debt than we had at the beginning of 2015. That would bring the average indebted household’s balance to a perilous $8,500.
In short, the stakes are high and picking the wrong card would be like skipping the house that gives out King Size candy bars on All Hallows’ Eve. To help people avoid making scary credit card choices this year, we compared more than 1,000 offers (some of which originate from advertising partners) and identified both the tricks capable of leaving your wallet crying and the corresponding treats that will make your financial life much sweeter. Here’s a quick summary of the worst of the worst.
The Trick: In addition to a 36% interest rate, this card charges a $95 processing fee prior to account opening and a first-year annual fee of $75 to $125, depending on your credit limit. In each subsequent year, you’ll have to pay an annual fee of $45 to $49, a monthly fee of $6.25 to $10.40 and a 25% fee for any credit limit increase. That’s a heck of a burden for someone with bad credit to bear.
Note: First Premier sued CardHub (now part of WalletHub) in 2013 and subsequently dropped the lawsuit. The case had no bearing on the Gold Card’s inclusion on the list, as selections were purely editorial in nature.
The Treat: With no annual fee, the Discover it® Secured Credit Card can be free to use as long as you pay your bill in full every month. It also gives you 2% cash back at restaurants and gas stations (for the first $1,000 in combined purchases each quarter) as well as 1% on everything else. Plus, Discover will double your first-year rewards earnings.
The Trick: In return for a terrifying $995 annual fee, cardholders get a $200 airfare credit each year, access to a concierge, the vague promise of luxury gifts and 1 point per $1 spent on most purchases (average for a rewards card). Even though these earnings equate to 2% back when redeemed for a statement credit and double that when redeemed for airfare, this card simply doesn’t yield enough value for its annual fee to be a good investment. After all, numerous other credit cards offer more-lucrative rewards bonuses and higher ongoing rewards earning rates for hundreds of dollars less per year.
The Treat: The Barclaycard Arrival Plus Credit Card is one of 2017’s best all-around travel rewards credit cards. Spending $3,000 during the first 90 days will earn you 40,000 bonus miles, redeemable for a $400 statement credit that can be used to pay for any travel-related expense you charge to the card. Furthermore, you’ll earn the miles-equivalent of 2.1% cash back across all purchases. There is no annual fee in the first year ($89 thereafter).
The Trick: This card is frighteningly expensive for people who want to reduce the cost of existing debt, charging a 5% balance-transfer fee and a 23.49% regular APR, while offering 0% on transferred debt for just the first 6 months. In fact, this card is the most expensive option among cards with no annual fee that offer reduced introductory rates on balance transfers – the most likely candidates for indebted consumers.
The Treat: The Barclaycard Ring™ Mastercard® offers 0% on transferred balances for 15 months (on transfers made within 45 days of account opening) and charges neither a balance transfer fee nor an annual fee.
The Trick: This is one of many store credit cards that treats you to a reduced introductory rate (0% for 6 months, in this case), then tricks you with a feature called deferred interest if you mess up in the slightest. If you miss a payment by a day or leave even a $1 balance unpaid at the end of the 6-month intro period, a 29.99% rate will be assessed to your entire original purchase amount as if the 0% deal never existed.
The Treat: If you have Amazon Prime, the Amazon.com Store Card can’t be beat, offering 5% back on all purchases without charging an annual fee. The Walmart and Target store credit cards are good deals, too, as the former offers 10% off your first purchase and the latter gives you 5% back on all purchases.
The Trick: This card charges a $9 annual fee and does not offer rewards or low introductory interest rates. Small business credit cards are known for their business-oriented rewards programs (which are often lucrative enough to warrant paying an annual fee), so business owners who opt for the CorTrust Bank Visa Business Credit Card are forgoing an opportunity to earn a lot of free money.
The Treat: Capital One Spark Cash for Business offers a $500 initial bonus as well as 2% cash back across all purchases. The card’s $59 annual fee is also waived for the first year.
Note About Small Business Financing: It's important to note that the designation of ‘Worst Credit Card for Small Business Funding’ has to go to the majority of small business credit cards. The Credit CARD Act of 2009 does not apply to business credit cards, which means they don’t benefit from the rule prohibiting issuers from increasing interest rates on existing balances unless a cardholder is at least 60 days delinquent. While certain issuers, like BofA, have proactively adopted that rule for their business-branded cards, everyone else's business credit cards are ill-suited to be funding vehicles for small business owners. Instead, business owners should use some of the best general-consumer 0% APR and balance transfer credit cards, as they will not incur any additional personal liability relative to a business credit card.
6 Tips for Avoiding a Scary Credit Card
Halloween comes but once per year, yet scary credit cards are always lurking. So, here are some tips that will help you determine whether a given offer is a trick or a treat.
Evaluate Your Needs: There is no one-size-fits-all credit card. From the credit standing needed for approval to the fee structure and associated perks, there are myriad ways in which one credit card offer may differ from another. And since cards that excel in one particular area – rewards, for example – are likely to be deficient in others, it’s very important that you determine exactly what you need before looking into specific offers.
Try CardAdvisor: WalletHub has a new tool that helps you pick the right credit card for your needs. All you have to do is answer a few anonymous questions based on your credit standing and financial obligations, and CardAdvisor will automatically compare more than 1,000 offers to make a personalized recommendation.
Use the Island Approach: The Island Approach is a credit card strategy that involves isolating different types of transactions on different accounts in order to garner the best possible collection of terms. For example, this might entail getting a rewards card for everyday expenses that you pay off completely by the end of the month and a 0% balance transfer credit card to lower the cost of existing debt.
Compare Terms, Not Branding: Consumers too often get hung up on which bank issues their credit card or what cards they’ve seen advertised on TV. Those things don’t matter. Dollars and cents are what counts, so make sure to compare relevant offers across issuers in order to identify the card that will save you the most money.
Read the Fine Print: While credit card disclosures have improved in recent years, they still aren’t perfect. And even though fine print can lead to headaches, it can also contain crucial information that impacts how much you pay for card use as well as the overall benefit you derive from your card.
Track Your Progress: Reviewing your monthly account statements and taking advantage of your right to free annual credit reports will enable you to keep tabs on your spending and payment habits, your credit building progress, and erroneous information that could indicate either fraud or credit bureau errors. Using a credit card calculator to plan a debt payoff strategy before transferring a balance or making a big-ticket purchase will also help you minimize interest payments.
I am so furious right now! I have AMEX and Wells Fargo cards, which are great! Recently, I noted with anger that one of the credit card monopoly-manipulator organizations lowered my score from Good to Not Good, despite the fact that they even acknowledge my payments are 100 percent on-time, every time! I had many unusually high expenses due to disability/cancer this year. I used my cards a lot. I am not overwhelmed by credit card debt like many others and fortunately I have the means and ability to repay. I could even pay off all my credit card balances tonight if I so chose! Now that I am in (cancer) remission, I have started to focus on saving money again. The major department stores kept asking me to accept their cards, so I did. I do not owe them a penny, but apparently, I have too many cards/accounts about 12 open, I think. This is apparently a "factor" in my FICO score. I am wondering if I need to close some of these accounts. I am expecting to come into a moderate amount of cash in the near future. What really irks me is that I am a libertarian by nature, and these credit card agencies spy on my life uninvited and manipulate my data, controlling my ability to obtain decent credit terms. I think that these agencies must be stopped because they are out of control. Frankly, they are like the old Soviet KGB. I recently read one of my reports-it was literally a dossier on my life. It truly alarmed me how much of my personal life's details were in it. Big Brother really is watching! I am not sure if these agencies are regulated by our government or work for and with our government to control all of us, but it is disgusting. I recently applied for an airline card and was turned down based on the rubbish one of these bureaus put down as my new, latest FICO score. PayPal turned me down too. Now I am compiling my own list of banks and their credit cards to boycott. I urge you guys to do the same. I expect to pay off 90 percent of my debit within the next year or so. It is not a large amount of money. Once the "Bureaus" revise my score for the better, I expect these banks to start sending offers again. This time, I choose to remember the banks that made my life difficult, while in the midst of cancer treatment no doubt. I am compiling a list of banks which I will no longer do business with. So far, I choose to no longer do any business with Comenity and Chase. Perhaps we should all get together and pool our resources to stop these Credit Bureaus from messing with our lives and wielding so much power over our destinies!! And finally, it was WE THE PEOPLE who provided massive bailouts for many of these banks during the financial crisis of 2008. This is how they reward us!
No, do not close any accounts! The only time you should close an account is if you have a balance and they are about to raise the interest; closing the account will stop the increase, of course you have to pay back what's owed.
You keep the accounts open because you want as much dilution as possible - the trick is not to use too many at the same time; try to keep up to 3 accounts. By the same token you should try to use all the cards at least occasionally or the credit card bank might either close them or reduce the credit limit and you don't want this.
The higher amount available to you the better; the trick is to have the smallest amount actually in use that is comfortable for you.
Remember, also, that even if you pay your balances off in full each month that the reporting to the credit bureaus are the time of the statement's closing, and NOT the date the payment is due. Usually they report the day the card cycles, but it can be a day or so before or after.
Try to use a card or 2 each month- non-use lowers your score- it's a sick joke; if we have the credit cards and are paying cash, this should be a positive!
Don't make further purchase the same card for which you're using a balance transfer unless the terms specifically state you won't be charged interest on the new purchases.
Be careful before applying for a card re what your interest rates might be (so many don't disclose until after an inquiry is pulled and every inquiry but the first within 2 years); some tell in advance what interest rate the particular card offers but most give a range and they tend to be too high no matter what your credit is; there's always an excuse as to why it's so high.
Do not apply for a new credit card within 2 years of a former application (or car loan) as it impacts your score.
Remember that the higher your score, the more you'll be dunned for too many inquiries; the computer algorithm sees a change in your spending habits and since it's not a human being a logical explanation cannot be included with your application- far too much automation hurts everyone- from those using credit to the creditor, itself.
Hope this helps.
For my personal use I have found that Capital One credit cards to be the worst, I also found that the Card issued by Home Depot to be Bad in the sense that you could go in to a store and pay your bill ahead of time and the store has the option to post the payment when they want at times making it show as a late payment and costing you interest..I will read the small print on my receipts from now on.