Recent surveys have shown that more than 80% of American adults have at least one credit card. They’ve also revealed that many people have more than one credit card, which is why there are more than 1 billion credit cards in the U.S. right now.
Not all types of credit cards are created equal, though. There are good and bad credit cards, and it’s going to be up to you to choose the right kind of credit card when you’re in the market for one.
We’ve created a list of the five characteristics you’ll find in substandard credit cards so that you know which credit cards to avoid. Check them out below.
1. High Fees
The first thing you should look for when you’re considering a credit card is which fees you’ll have to pay for it. Some credit cards come with unwelcome fees that don’t match up to your spending goals. These high fees are typically for premium cards that provide extra benefits and rewards for spending to cardholders. They’re not right for everyone, and benefit those that pay their balance off every month.
If you have poor credit, you might not be able to steer clear of paying some sort of fee for a credit card. But you should try not to sign up for one that’s going to hit you over the head with fees every time you turn around.
2. Ridiculous Interest Rates
The credit card interest rate that you’re able to get will determine how much interest you’re going to be charged on your balance each month. It’s why you want to shy away from substandard credit cards that have very high-interest rates.
You should also look for a card that’s going to come with a very low introductory interest rate, if possible. Some cards will provide a 0% introductory rate for a specific term on new purchases and/or balance transfers.
3. Low Credit Limits
If you have poor credit, you might be subjected to low credit limits on some credit cards at first. This is perfectly normal and even understandable since credit card companies will be wary about extending too much credit to you.
But if you have even decent credit, you shouldn’t have to live with a credit card that’s only going to extend a few hundred dollars worth of credit to you. Bad credit cards will limit how you’re able to use them by keeping your credit limit on the lower side.
4. Lack of Upgrade Options
Over time, a credit card company should give you the opportunity to upgrade your credit card. They should provide you with a chance to apply for a higher credit limit as long as you’re able to prove you can be trusted with it. This will also allow you to tap into valuable rewards as your credit worthiness improves.
If a credit card company isn’t going to make it possible for you to upgrade a credit card, you should search for one that’s going to be able to grow along with you. Otherwise, it won’t be long before you’ll need to ditch that card in favor of a better one.
5. Limited Credit Reporting
The credit card company that you get a credit card from should report to all three major credit bureaus. This should include Equifax, Experian, and TransUnion.
If they don’t do this for one reason or another, it’ll make it challenging for you to build credit by using a credit card. Your solid payment history isn’t going to show up on all your credit reports.
Avoid Low Quality Credit Cards at All Costs
Using a credit card to make purchases on a regular basis can work wonders for your credit score. But you should stay away from bad credit cards that will prevent you from being able to make the most of having a credit card.
If you spot any of the qualities listed here when you’re researching a credit card, stay away from it. It’s not going to do you any good in the long run.
Read more informative articles about credit cards by poking around on the rest of our blog.