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Which credit cards should you avoid?

Different financial situations call for different credit cards. Here's how to know if a card is right -- or wrong -- for you.

By Apr 21, 2014 11:46AM

This post comes from Jason Steele at partner site on MSN MoneyBetween television commercials, and advertisements on the Internet and in your mailbox, there is no shortage of information about credit cards.

Credit cards © Corbis

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 Cards that offer rewards worth a mere 1 percent of the amount spent are hopelessly outdated when there are currently several cards that offer 1.5 percent to  2 percent cash back on all purchases, while others feature up to 6 percent cash back at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 percent 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 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 percent 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. 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.

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