Smart SpendingSmart Spending

The worst credit cards of 2012

Want to rebuild credit, maximize rewards or get the lowest possible interest rate? Stay away from these cards.

By MSN Money Partner Oct 30, 2012 1:50PM

This post comes from Odysseas Papadimitriou of Card Hub.

Card Hub logoCredit cards catch a lot of flak for being conduits to debt as well as charging high fees and interest rates, but the truth is, much of their negative reputation comes as a result of either irresponsible usage or a few bad offers.


Image: Credit card © Fancy, Veer, Corbis, CorbisGetting one of the worst credit cards of 2012, as identified by the credit card comparison website Card Hub, will not only cost you hundreds of dollars, it will also prevent you from taking advantage of the historically attractive offers that are currently on the market.


The particular card that's worst for you depends on your exact needs, so let's take a look at the offers to avoid in seven different major credit card categories.


Need: Rebuild credit
Card: First Premier Bank Gold Credit Card
Explanation: There's little differentiation among credit cards for people with bad credit, so your objective in choosing one should be to minimize costs. That certainly doesn't entail getting the First Premier Bank Gold Card, which has a 36% interest rate and charges a $95 processing fee prior to account opening, a $75 first-year annual fee and both a $45 annual fee and a $6.25 monthly fee beginning in the second year.


It's obviously a much better deal to opt for a secured credit card, which you can get by placing a $200 refundable security deposit and paying a $29 fee during the first year instead of $170.


Need: Maximize rewards
Card: Visa Black Card
Explanation: The Visa Black Card is essentially a poor attempt to capitalize on the social cache of American Express' Centurion Card, which is commonly referred to as the Black Card and is a status symbol among actors, musicians and athletes. In return for paying a $495 annual fee for the Visa Black Card, you'll only get one point per dollar spent, airport lounge acces, and concierge service.


According to Card Hub's Q3 Credit Card Landscape Report, the average rewards credit card offers 1.08 points per dollar spent or 0.98% cash back and doesn't charge an annual fee that even comes close to $495.


Need: Get the lowest possible APR for upcoming purchases
Card: Arvest Bank Classic Credit Card
Explanation: Offering a 4.9% introductory APR on new purchases for the first six months, this Arvest Bank credit card has the highest new purchase intro rate of all the cards that offer one and provides it for the shortest period of time. To put this in perspective, the best credit card for avoiding interest on upcoming big-ticket purchases, the Citi Diamond Preferred Card, not only gives you a 0% introductory rate, it provides it for a year longer than the Arvest Bank card offers 4.9%.

Need: Lower the cost of existing debt
Card: UBS Preferred Visa Signature Credit Card
Explanation: It's a bad time to market an obviously unattractive balance-transfer offer, as the balance-transfer market is currently dominated by the Slate Card from Chase, which gives you a 0% introductory balance-transfer APR for 15 months and charges neither a balance-transfer fee nor an annual fee. Forgoing that card in favor of the UBS Preferred Visa Signature Credit Card, which offers a 9.99% balance-transfer APR for six months and charges both a 3% balance-transfer fee and a $495 annual fee, would therefore be a very costly decision. 


Using a credit card calculator, you'll find that the average household, which has roughly $6,700 in credit card debt, would waste more than $1,900 in fees and interest paying down debt over a 24-month period using the UBS card as opposed to the Slate Card from Chase.


Need (for students): Build credit and minimize costs
Card: U.S. Bank College Visa Credit Card
Explanation: Banks generally offer college students better credit card terms than their credit standing warrants because of their relatively high earning potential and the years of financial independence ahead of them. While you can therefore expect to get some decent rewards or a 0% introductory interest rate, the U.S. Bank College Visa Credit Card won't be the one providing either. 


It doesn't provide rewards or low introductory rates of any kind, but what it does give you is the possibility of ending up with a 20.99% regular APR -- the highest rate of all the student credit cards we evaluated.


Need (for small-business owners): Maximize rewards
Card: U.S. Bank FlexPerks Select Rewards Visa Business Credit Card
Explanation: Small-business owners charge a lot more to their credit cards than the average consumer, and so they rightfully expect to garner some impressive rewards in return. That's historically been the case as well, with business credit cards typically offering some robust rewards earning rates, particularly in spending categories such as office supplies and telecommunications services.


The U.S. Bank FlexPerks Select Card bucks that trend, however, by offering 0.5 point per dollar spent, which is both far below average and at risk of being made even less valuable if U.S. Bank decides to increase the number of points required to redeem its perks.


Need (for small-business owners): Fund business operations
Card: Most of them
Explanation: The Credit CARD Act of 2009 doesn't apply to small-business credit cards, which means that the APR on your existing balances can change for no reason and at any time. Since it's difficult to manage a company under the constant threat of unexpectedly expensive debt and using a general consumer credit card won't increase your personal liability, it's best to use a 0% consumer card for your small-business funding needs.


It's important to note that certain issuers like Bank of America have proactively applied all of the CARD Act rules to their business credit cards, but limiting yourself to one issuer's products will make it hard to get the best rates.


At the end of the day, these offers may cause you to lose a bit of faith in credit cards, but make no mistake about it, there are still some great deals on the market right now. In addition to the aforementioned Citi Diamond Preferred Card and the Slate Card from Chase, which offer low introductory interest rates on new purchases and balance transfers, you could score a $500 initial bonus with the Chase Sapphire Preferred Card, 6% cash back at supermarkets with the Blue Cash Preferred Card from American Express, and a full 2% cash back with the Spark Cash for Business from Capital One.


In other words, there's as much upside in getting the best credit card as there is downside in getting one of the worst.


More on Card Hub and MSN Money:


Nov 1, 2012 3:34PM
Credit card companies are organized crime in disguise.  These people will suck every penny from you at every opportunity.  Get rid of those credit cards and live within your means.  I dumped three credit cards and now I dont need them anymore, so they can kiss my APR.  I did cash in some retirement to pay off the credit cards and I am glad I did, retirement fund making 3% credit cards paid off at 16%.  Now I can rebuild my retirement fund and its working fine.  Credit card companies are very dishonest and can ruin your life. Control them, dont let them control you.
Nov 1, 2012 4:08PM
TO ALL OF YOU OUT THERE  ( NEVER ) GET A CREDIT ONE BANK CARD!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Nov 1, 2012 3:04PM
Nov 1, 2012 8:31AM
The only reason to get a credit card , is convenience when traveling, Always pay all the amount every month after checking for fraudulent charges.  Credit cards are essential if one purchases on line or by phone.  One exposes his most private personal information this way and a bargain becomes ones credit down fall.  100% of scams get their info from this source.  I don't care what credit card you have,  Don't charge any amount if you don't have the money to pay off when the bill is due monthly.  Therefore, get yourself a debit/credit card from your bank and avoid all charges.
Nov 1, 2012 8:35PM
Nov 1, 2012 4:15PM

Quoted from the article:

"much of their negative reputation comes as a result of either irresponsible usage or a few bad offers"


This is absolutely correct. If there is one thing that is certain, the people who complain about how credit cards are "evil" are the same people who don't understand how to use them properly. 


Buy only what you can afford to pay and only use credit cards that do not have fees.  Those are the only rules you have to follow. 


Since I follow the rules and since I am responsible, I get to enjoy at least $300 cash back every year.  That money would have been wasted if I had paid cash.

Nov 2, 2012 5:33AM
  I have one credit card that I pay off each month solely for safety when ordering over the internet or a major purchase I want protection on. I use a debit card for every thing else.
Nov 2, 2012 2:07AM

Get a debit card.  If you have no money in your bank account you can't buy anything.  No interest charge, no payments to make.  Just make bank deposits when you get the money if you plan on buying anything with the card.

Nov 2, 2012 8:46AM
I'm happy with my discover card.  I get cash back every year and pay no interest because I pay my card off every month with the money I didn't use when I charged something.  What a convenience.  It's not rocket science.  Only buy with your credit card what you would buy with cash and keep the cash to pay off the credit card bill when it arrives.  It may not be much, but I get $50 to $75 back every year just for using my card to pay for my gas, groceries, and an occasionally some clothes or other necessities.  I don't care about building credit history or anything else.  Just the convenience of being able to buy things without first having to go get the cash is enough for me and the cash back reward is just more gravy on top!  It's not the credit card company's  fault if people miss use their credit cards.  I never did get it I guess.  I mean why shouldn't I spend more than can I afford?  Am I missing something?  What financially competent person would do something like that?  Oh, maybe Americans!  After all, our education system is a joke, ranked some where like 17th in the world and routinely turns young people loose on the economy that are mathematically challenged and functionally illiterate!

Nov 2, 2012 6:59AM
RBS is a credit card that you should stay away from.. but I applied for one and the original application which (I made copies to prove it), was 7.99 % FIXED. FIXED means it does not change, it was great for the first six billing cycles then the rate jumped to 17% so I disputed it with the CFPB (Consumer Finance Protection Bureau) another worthless agency set up by the current administration funded by our tax dollars. they did nothing, as well as the office of the comptroller. they are all crooks I will pay it off never ever to do business with them again... as far as the CFPB goes get rid of it too! worthless if it's disfunctional close it down. same with the office of the comptroller. shut 'em down save the tax payers money..       
Nov 2, 2012 12:57PM
Nov 2, 2012 3:23PM

Do not blame the credit card companies if you arent smart enough to pay them off every month!

Use your brains!

Nov 2, 2012 12:49PM
There is NEVER a good reason to go into debt, which is what your doing with each and every credit card purchase. Get rid of all your cards, save up a 6 month emergency fund, get rid of all your debt, and (this may sound radical) ONLY BUY WHAT YOU CAN AFFORD !! (i.e., actually have the money IN HAND to pay for!!) The "Credit Score" should be renamed the DEBT SCORE. The only reason you need a credit score is to go further into DEBT. Why, people, WHY ?!?! Act like an adult, put off the "I gotta have it now" mentality, and run your finances like your grandma would. If she didn't have the money, she didn't buy it.
Nov 1, 2012 9:33PM
Best credit card in America, Simmons First Visa Card, Hands down.  7.5 interest, tough to beat.
Nov 1, 2012 7:51PM

The Center for Disease Control has issued a warning about a new virulent strain of this old disease. The disease is called "Gonorrhea Lectim." It pronounced "Gonna re-elect em" and is a terrible Obamanation. The disease is contracted through dangerous and high risk behavior involving cranium up the rectum. Many victims contracted the disease in 2008. Most people, after having been infected during the past 4 years, are beginning to realize how destructive this sickness can become!

Gonorrhea Lectim is easily cured with a new drug on the market called "Votemout." The first dose should be taken now and the second dose in Nov. 2012. Everyone should be warned not to engage in this type of behavior again; otherwise, it could become permanent and eventually wipe out all life as we know it.

Please inform all those bright persons you love and really care about.

Nov 1, 2012 6:50PM

I have a mastercard,I also have a low credit score. My card cost me nothing,nada,no set up fees,no monthly fees. It is the best card i know of for rebuilding your credit and i have my grandaughter's picture on it. It's only $300.00 but if you pay it off every month for 6 month's it doubles! $300.00 isn't much but it can come in really handy for unexpected thing's! I also have a marathon gas card,and a walmart card. They are all the same as my mastercard,cost nothing to get or setup! Just a thought to those that have had a bad run of luck,but you have to pay them off every month! Look at it like this just follow the U.S. congress's role and kick the can on down the road untill thing's get better,or robme is elected. If that unforseen run of bad luck through some form of stealing the election happens charge you bankruptcry on your card and kiss your $ss good buy,we're screwed!

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.