The 12 worst types of credit cards to avoid at all costs

Navigating the world of credit cards can be a daunting task.

With so many options available, yes easy to fall into a trap choosing a card that looks great at first, but ends up costing you more than you expected!

To help you make informed decisions, I’ve compiled list of the worst types credit cards to avoid

I have provided some example cards (*note: card offers and rewards are constantly changing, but at the time of writing my guide was right).

This guide will ensure that avoid pitfalls and find the right card for your needs.

Types of credit cards to avoid at all costs

1) Prepaid debit cards issued as credit cards

What are:

These will easily win ‘the sneakiest’ appreciation in my eyes.

Prepaid debit cards they are sometimes marketed as credit cards, but what many don’t know is that they are No they actually help you build credit and often come with high fees.

AND prepaid card can charge $4.95 activation fee and $2.95 monthly feequickly eat balance.

Why avoid:

• Does not build credit: Since they are not real credit cards, they do not report to credit bureaus.
• High fees: These cards may have activation fees, reload fees, and monthly fees.

Example card*:

Green Dot Prepaid Visa Card

• fees: Monthly fee $7.95, reload fee up to $4.95.
• Disadvantage: It does not build credit and comes with various fees that can reduce the value of the card.

2) Cards with a high annual fee without significant benefits

What are:

Some credit cards come with annual fees that can reach hundreds of dollars but offer minimum rewards or benefits in return.

If you’re looking for a rewards credit card, read on fine print careful – make sure it is actually offers you what you are looking for and not just a list of benefits you pay for but never actually use.

Why avoid:

• Ineligible costs: Paying a high annual fee without getting significant benefits or rewards is a complete waste of money.
• Better options: Many no-fee or low-fee cards offer comparable or even better benefits.

Example card*:

Premier Bank’s first credit card

This card may work for some, but for many it just isn’t worth the annual fee. What exactly are you paying an annual fee for given the abysmal rewards?

• Annual fee: First year up to $125, then $49 annually.
• Disadvantage: It offers very few benefits or rewards in exchange for a high fee.

3) Cards with sky-high interest rates

What are:

These cards have interest rates that can exceed 18-30%so any balance carried over from month to month is extremely expensive.

Why avoid:

• Freight debt: High interest rates can make it difficult to pay off the balance, leading to a cycle of debt.
• Financial burden: Interest can quickly exceed your ability to repay the principal.

If you have a $1,000 balance on a card with an interest rate of 29.99%, you’ll pay almost $300 in interest per year. That’s a significant a financial hit.

Example card*:

Credit One Bank Platinum Visa for Credit Recovery

• APR: 17.99% – 23.99% variable.
• Disadvantage: High interest rates, especially considering that it targets people with bad credit. You are likely to fall back into the bad credit trap.

4) Cards with deferred interest

What are:

These cards offer a “no interest” promotion for a set period, but if you don’t pay off the full balance by the end of that period, you’ll be charged a fee all back interest from the original date of purchase.

Why avoid:

• Hidden costs: Deferred interest can surprise you with high fees if you miss your payday.
• Complex terms: The terms are often confusing and can lead to significant financial problems. Deadlines are hard to keep, and credit card companies know it.

Purchase a $1,500 Television with a 12-month deferred interest plan, but did not pay it off in full within that period may result several hundred dollars in back interest that you didn’t count on.

It’s a bit like signing up for a ‘free’ gym membership only to find you owe for every month you haven’t gone plus a penalty!

Example card*:

Amazon Store Card

• Support: 0% interest for 6-24 months on purchases over $150 if paid in full during the promotional period.
• Disadvantage: The retroactive interest if not paid on time can be very high.

5) Cards without mercy

What are:

Most credit cards offer a interest free period between the end of your billing cycle and the due date during which you can pay off your balance without interest.

Instant cards don’t do this and instead start charging interest on new purchases immediately!

Why avoid:

• Immediate interest: Interest starts accruing to you from the moment you make the purchase.
• Budget complications: It complicates budgeting and managing cash flow, especially if you rely on using a credit card for everyday expenses.

Example card*:

Bank® Secured Visa® Gold Preferred® credit card used

• APR: 9.99% fixed. Not bad for initial interest.
• Disadvantage: No grace period for purchases, meaning interest accrues immediately.

6) Limited loyalty cards

What are:

These cards promise rewards but limit categories in which you can earn points or cashback, making it difficult to accumulate meaningful benefits.

Why avoid:

• Slow Accumulation: You’ll find it frustrating to be slow to earn enough points or cashback to make a difference.
• Better reward structures: Many other cards offer versatile and generous rewards programs.

For example, a card with limited rewards might only offer points for grocery purchases, but nothing for gas, travel, or dining.

Example card*:

Citi Rewards+℠ Card

• Rewards: 2x points at supermarkets and gas stations on the first $6,000 per year, then 1x points.
• Disadvantage: The limited category for getting rewards and earning is limited very low.

7) Cards with high fees for foreign transactions

What are:

These cards are loaded high fees (typical 2-3% on each transactions) when you use them abroad or for purchases in foreign currencies.

Why avoid:

• Freight for travelers: If you frequently travel or shop abroad, these fees can add up quickly.
• Travel alternatives: Many cards waive foreign transaction fees and even offer travel rewards.

Using a card with a high foreign transaction fee for a a $1,000 purchase abroad can cost you extra $30 in feeswhich doesn’t sound like much, but when you add in the currency conversion fees, it adds up quickly.

Example card*:

Capital One Platinum Credit Card

• Foreign transaction fee: 3% of every US dollar transaction.
• Disadvantage: High foreign transaction fees that are costly for travelers.

8) Secured cards with non-refundable fees

What are:

Secured credit cards require a bailwho usually serves as your credit limit. Some of these cards charge non-refundable application or processing fees.

Why avoid:

• Advance fees: These fees reduce your available credit and are non-refundable, making them a poor deal compared to other secured cards.
• Better Secure Options: There are secured cards that refund your deposit and don’t charge exorbitant fees.

Secured card with $50 non-refundable application fee and $200 deposit limits your credit and it will cost you more up front.

Example card*:

First Progress Platinum Elite MasterCard® Secured Credit Card

• fees: $29 annual fee, non-refundable processing fee.
• Disadvantage: Non-refundable upfront processing fees reduce the value of the deposit.

9) Keep credit cards

What are:

Retail credit cards are offered by retail stores and often come with high interest rates and limited applicabilityif any, outside the store.

Why avoid:

• High interest rates: These cards usually have higher interest rates than regular credit cards.
• Limited use: They are usually only good for purchases at the issuing store.

A store credit card can also be raise the interest rate and I’ll tell you just inside good print eg they might offer 20% off your first purchase, but then hit you with a 27% APR and limited rewards after that.

Example card*:

Macy’s Credit Card

• APR: 25.49% variable.
• Disadvantage: High interest rates and limited use of rewards outside of Macy’s stores.

10) Balance Transfer Cards

What are:

These cards offer tempting balance transfer transactions but come up with high balance transfer fees or interest rate increases if the balance is not paid off within a certain period.

Why avoid:

• High fees: Balance transfer fees (often 3-5%) can negate the benefit of a balance transfer.
• Interest rate pitfalls: If you don’t pay off the balance during the promotional period, the interest rate can shoot up.

Balance transfer card sa 3% charge on a $5,000 the transfer will cost you 150 dollars in advance. If not repaid during the promotional period, you urine face and 25% interest rate.

Example card*:

Wells Fargo Platinum Card

• Support: 0% APR for 18 months on balance transfers.
• Disadvantage: Balance transfer fee 3-5% and high regular APR of 16.49%-24.49% variable after promotional period.

11) Unreliable cards for redeeming rewards

What are:

These cards do just that difficult to claim your rewards due to complicated terms, blackout dates or minimum payout options.

For example, a card may offer travel points but limit their use to specific dates or airlines, limiting your ability to use them effectively.

Why avoid:

• Withdrawal difficulties: Difficulty redeeming rewards can make the card less valuable.
• Better Rewards Programs: Many other cards offer direct and generous payout options.

Example card*:

Wyndham Rewards Visa Card

• Rewards: Earn points for Wyndham stays.
• Disadvantage: Limited redemption options and blackout dates can make it difficult to claim rewards.

12) Cards with sneaky fees

What are:

These cards are notorious for hidden management feessuch as account maintenance fees, inactivity fees and more.

These cards may even charge $10 monthly maintenance fee if you don’t use it often enough.

Why avoid:

• Hidden costs: These fees can add up quickly and cost you more than you expected.
• Transparent alternatives: Look for cards with clear fee structures and minimal hidden fees.

Example card*:

Credit One Bank® Visa® Credit Card

• fees: $0-99 annual fee, monthly maintenance fees after the first year and credit limit increase fees.
• Disadvantage: Numerous hidden fees that add up quickly.