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Which Credit Cards should you Avoid?

Aug 17, 2007
Just as there is no best credit card for everyone, there's no single one that stands out as the worst, or one to avoid. It's all about finding the one that fits your needs and your circumstances. It may be easy to say 'avoid any credit card that has an APR above x%' - but there are people out there who need a card and can only qualify for one with a high APR. If one doesn't compare credit cards based on APR or annual fee, then how does one determine which are best avoided?

Rather than putting together a list of credit cards to avoid, it's far more profitable to pay attention to a list of do's and don'ts that will help you select the best for your circumstances and situation.

1. Know yourself.
There are some very good comparison websites where you'll find guides to selecting the best credit card for your spending and money management style. In general, if you tend to pay your accounts in full each month, apply for a card that offers you rewards for using it on things you'll purchase anyway. If you tend to carry balances on your account, pay attention to the APR and avoid those with high APR's and late fees that kick in with a vengeance.

2. Know the credit cards you're applying for.
Do your homework before you make applications. Take the time to read cardholder agreements so that you know all the fees, penalties and conditions to which you're agreeing. In particular, look for the following - all of which have to be outlined in the card member agreement:

- Annual fees or participation fees which will be charged to your new card. You'll be liable for the first year's fees even if you never use the card.

- The APR (annual percentage rate) is the interest rate that will be charged on your outstanding balance. The agreement must also disclose whether the rate is fixed or variable, and if it's variable when and how often it can be changed, and how much notice they're required to give you.

- Transaction fees for particular transactions, like cash advances, may be additional. Those need to be listed in the agreement.

- Any monthly fees for your card. Some credit card companies charge a monthly fee whether or not you use the card.

- The method used to compute the interest on your balance can make a big difference in the fees that you're charged. Knowing how and when those fees are computed can save you a considerable amount of money.

3. Avoid 'fake' credit cards.
Be sure to read all the information about the options you're considering carefully. There are some offers that imply that you'll get a major credit card with a large spending limit - but the card that you actually get is only valid if you purchase items from their catalog or online merchants. You'll pay a premium price for a limited number of products at high interest rates - and in most cases, you'll pay a high annual membership fee and monthly participation fee which you'll be billed for even if you never use the card.

When you're looking for the best credit card, make sure you take the time compare all the options before making your applications.
About the Author
Jon Francis has been involved with finance for many years! With an in-depth knowledge of the credit card UK market help helps others get the best from a credit card.
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