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.
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.
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.
Worst Card for Students: U.S. Bank College Visa Credit Card
This is the card’s third appearance on the worst cards list.