Smart SpendingSmart Spending

The 7 worst rewards credit cards

With all the great rewards being offered right now, there's no reason to settle for offers like these. Here's how to compare.

By Stacy Johnson Jul 21, 2011 9:15AM

This post comes from Jason Steele at partner site Money Talks News.


If you always pay your credit card balance in full and on time, you deserve to be rewarded for your loyalty. Your credit card should pay you.

The market for rewards credit cards has become extremely competitive, as we've previously reported. (See: "Rewards return for some credit card holders.") But that hasn't stopped banks and others from offering some truly awful products.

In no particular order, here are what I consider the seven worst rewards cards, along with some advice that will make you a smarter credit card shopper:

Kroger 1-2-3 Rewards MasterCard (U.S. Bank)
Why it's bad: This card earns you a pathetic 0.5% return on most purchases, and the rewards only come in the form of gift certificates to be used at their store.

What to look for: Any respectable rewards card should return at least 1% cash back, or a much higher percentage if it's just offering store credit.

Bank of America World MasterCard
Why it's bad: While offering numerous redemption possibilities is a good thing,  deciphering Bank of America's Worldperks program's details could be the subject of scholarly research. Hidden in the pages of terms and conditions are fees that are only "disclosed at the point of redemption."

What to look for: The ideal rewards card offers a simple formula for returning value to the cardholder and any fees should be clearly disclosed in advance. Post continues after video.

MTV Visa Credit Card from Capital One
Why it's bad: This card is marketed to young adults who are rewarded with 25 cents worth of bonus points when they pay their bill on time -- since a shiny quarter is what every kid dreams of, right? On the other hand, failing to pay your bill on time will result in a penalty APR of 29.4% and late fees of up to $35.

What to look for: When looking for a rewards card, beware of negligible rewards that are meant to distract you from harsh terms.

Wal-Mart Discover
Why it's bad: This retail behemoth's card offers 1% cash back, just like most other Discover cards. Unlike some others, however, there are no bonus categories of spending -- even for purchases at their own stores.

What to look for: The entire point of obtaining a rewards card affiliated with a store you frequent is to obtain more cash back when you shop there.

Discover Motiva Card
Why it's bad: Like Capital One's MTV card, this card offers students a trivial "reward" of 5% off their interest charges for paying their bill on time. Discover also offers "up to" 1% cash back as a reward, but the fine print reveals that your first $3,000 a year in spending only earns 0.25% cash back -- a mere $7.50.

What to look for: Beware of weasel words like "up to," and closely read the credit card terms to find the catch.

Delta SkyMiles and SkyMiles Options (American Express)
Why it's bad: The SkyMiles and SkyMiles Options cards offers applicants pathetic sign-up bonuses of only 5,000 miles and 1,000 miles, respectively. Yet Delta and other carriers offer cards that include sign-up bonuses of 25,000 miles or more. Worse, neither of these Delta SkyMiles cards offer the checked-bag fee waivers granted to holders of all other Delta cards.

What to look for: Before applying for an airline-affiliated credit card, make sure you are choosing the version that offers the largest sign-up bonus, the most fee waivers, and other perks.

United Mileage Plus Visa Signature Card
Why it's bad: Like the Wal-Mart card, United misses the point of a loyalty program by not offering additional miles for purchases from United. Furthermore, this card offers a one-way, domestic, 1,000-mile upgrade certificate -- but it's only valid on pricey full-fare tickets.

What to look for: Before being tempted by credit card perks, be sure to investigate them to determine if they truly add value. Other questionable credit card perks include companion airline certificates that also require full-fare tickets and hotels that offer discounts off their inflated "rack rate."

What you should do

Most card-issuing banks and their affiliates are trying hard to win your business with truly valuable perks, but those same banks might also offer less-enticing cards. Any competitive offer will provide a sign-up bonus with true value, followed by a reward valued at 1% to 2% of your spending.


If you have one of these subpar rewards cards, now is the time to end your unrewarding relationship and upgrade to one of the many outstanding rewards cards being offered.

More on Money Talks News and MSN Money:



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.