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7 Worst Credit Cards of 2014

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The best credit card offers today are about as attractive as they have ever been, but the worst ones can be dark-alley scary, according to new research by CardHub, a credit card comparison website.

The U.S. is currently on track to end 2014 with some $55 billion more credit card debt that it began with after adding $76 billion to the tab in the previous two years.

In order to help small business owners, students and consumers avoid bad credit card selections this year, CardHub examined more than 1,000 credit cards to identify the least attractive offers.

By way of comparison, first consider what makes a good credit card offer.

According to CardHub, banks have been offering increasingly lucrative initial rewards bonuses and 0% introductory APR deals since the end of the recession. Applicants can still get an initial rewards bonus of $500 or 0% interest for the first 18 months their account is active.

In addition ongoing rewards have improved, thanks to the rebounding economy and fierce competition in the credit card industry.

CardHub identified the cards to avoid in seven key categories.

Small business

Worst Card for Small-Business Funding: Most Small-Business Credit Cards

The Credit CARD Act of 2009 does not apply to business credit cards, which means they do not benefit from the rule prohibiting issuers from increasing interest rates for existing balances unless a cardholder is at least 60 days delinquent. CardHub said its recent small-business credit card study showed that most small-business cards made poor funding vehicles, because the cost of a cardholder’s debt could increase at any time. An exception was Bank of America, which had proactively adopted the rule for its business-branded cards.

It said business owners instead should use some of the best general-consumer 0% APR and balance transfer credit cards, so as not to incur any additional personal liability relative to a business credit card.

Small business

Worst Small-Business Rewards Card: CorTrust Bank Visa Business Credit Card

Appearing for the first time on the worst cards list, this card charges a $9 annual fee and offers no rewards or low introductory interest rates.

CardHub pointed out that small-business credit cards are known for their business-oriented rewards programs, many lucrative enough to warrant paying an annual fee. Business owners who opt for this card “are forgoing an opportunity to earn a lot of free money,” it said.

Compare it with the Ink Plus Business Card from Chase, which offers 50,000 bonus points when you spend $5,000 during the first three months, five points per $1 spent on office supplies and telecommunications services (up to a $50,000 spending limit in those categories), two points per dollar spent on gas and hotel reservations (up to a $50,000 spending limit) and one point per $1 on everything else. It does not charge an annual fee during the first year, and charges $95 thereafter.

  College grad

Worst Card for Students: U.S. Bank College Visa Credit Card

This is the card’s third appearance on the worst cards list.

It offers no rewards or low introductory interest rates and a regular APR as high as 20.99%, one of the highest rates among student cards. Compare that with the Journey Student Rewards Card from Capital One, which offers 1.25% cash back across all purchases, and the BankAmericard for Students, which offers 0% on new purchases for the first 15 months; neither charges an annual fee.

 

Worst rewards credit card

Worst Rewards Card: Visa Black Card

This card, appearing for the fourth time on the worst credit cards list, is not to be confused with American Express’ Centurion Card. It “is just a grossly overpriced attempt to capitalize on the social cache of the ‘black card’ name,” CardHub said.

It offers a $495 annual fee in exchange for 1 point per $1 spent, airport lounge access and a 25,000-point initial bonus. Although seemingly decent terms, CardHub said, other cards available offer more lucrative rewards bonuses, higher ongoing rewards earning rates and airport lounge access for several hundred dollars less each year.

Car salesman

Worst Card for Big-Ticket Purchases: Toyota Credit Card

This is Toyota Credit Card’s initial appearance on the worst cards list.

It offers a 3.99% introductory interest rate on new purchases for six months and a 12.99% to 22.99% regular APR. CardHub said using this card would mean sacrificing a lot of value relative to other cards on the market that offer 0% on new purchases for 15 to 18 months.

Any card with an introductory interest rate might at first seem attractive, but the disparity that exists on the market among specific intro rates, intro terms and regular rates means that consumer costs can vary widely, according to CardHub. It compared some 400 credit cards with introductory rates to see how much each would cost a consumer trying to pay off a $1,000 purchase over two years. The Toyota Card was the most expensive offer in this category.

Worst balance transfer card

Worst Balance Transfer Card: UBS Preferred Visa Signature Credit Card

This is the card’s third appearance on the worst credit cards list.

It offers a 9.99% introductory balance transfer APR for six months, a 3% balance transfer fee and a $495 annual fee. By comparison, the Slate Card from Chase offers 0% on transferred balances for 15 months, and charges neither a balance transfer fee nor an annual fee. Worst card for rebuilding bad credit

Worst Card for Rebuilding Bad Credit: First Premier Bank Gold Credit Card

Appearing for the fourth time on the worst cards list, this card demands a $95 processing fee prior to account opening, a $75 annual fee during the first year, $120 in annualized membership fees in each subsequent year, a 25% fee for any credit limit increase and a 36% interest rate. The Harley-Davidson Secured Credit Card, by comparison, can be free to use and earns the cardholder rewards.

CardHub noted that it had recently been sued by First Premier, but said the litigation, which continues, had not influenced the editors’ decision to include this card in the list.

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