How To Spot A Bad Credit Card

Your credit cards play a significant role in your credit score and overall financial health, so you don't want to find yourself with a bad one. How do you know when to sign up and when to steer clear? Be on the lookout for these red flags:

High Interest Rates
If you carry a balance, the annual percentage rates attached to your card will play a large role in your monthly payment. Issuers offer different rates for different cards, so it's important to determine whether the rate you're being charged will end up keeping you locked down in debt. The general consensus among experts is to avoid credit cards with high variable rates. Unfortunately, there is no magic number to determine whether an APR is "too high." Rather, you should think about your spending patterns and the impact a rate would have on your monthly finances.

For example, consumers who don't pay off debts right away might find a rate of 29.99% too high, since this would add significantly to their monthly balance. When examining different rates, know how much you plan to spend and whether you will pay your card off during each billing cycle.

Large Fees
Charges for cash advances, late payments and exceeding one's limit can often be avoided. Some issuers charge application, annual and miscellaneous fees as well, and these are impossible to get around. While you shouldn't automatically dismiss a card's potential if it requires an annual fee---low rates, rewards, or other advantageous features could make up for it---be sure that these fees are reasonable and in line with what you can afford. As always, scour the terms and conditions thoroughly to avoid unexpected hidden fees.

Customer Reviews
Fees and interest rates are important factors when determining whether a credit card suits you, but customer reviews are just as crucial. Do your research and see how customers feel about an issuer's product and customer service. Negative reviews may open your eyes to something you hadn't previously considered. Likewise, positive reviews may let you know whether a lender is helpful in resolving conflicts, flexible when it comes to negotiating rates, and eager to offer new features and services to loyal customers.

Expert Reviews
Industry experts also provide inside knowledge about whether a particular credit product is advantageous to customers. If you're new to credit cards, these reviews may be especially helpful in alerting you about high rates or exorbitant fees. Try to read a variety of reviews to find consensus among experts.

In summary, your credit cards play a significant role in your credit score and overall finances, so avoiding bad credit cards is essential to adhering to a budget and maintaining your credit health.

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