How to Spot a Bad Credit Card

Effective credit repair begins with the proper tools. If you are in the market for a new credit card, it’s important to weigh its ability to help your cause. Credit utilization accounts for 30% of your credit score. That means nearly one-third of your financial reputation is based on your credit balance vs. your total credit limit. What’s worse, many cards come complete with hidden fees, outrageous interest rates, and other factors that could stand in the way of your credit health. Why sign up for a card with unnecessary liabilities? Do your homework by reviewing the Schumer Box of each card, and keep an eye out for the warning signs below. Overcoming bad credit is easier with the help of a reliable credit card.

Warning signs:

1. A high APR rate.

It’s no secret that credit cards come with high interest rates, but how much is too much? According to, the national average for credit card APR was holding steady this week at 14.91%. In addition to this factor, credit card companies should consider your credit score when determining your individual rate. A score of 720 or more warrants the same competitive consideration you would receive when qualifying for any other loan. Take a look at the APR attached to your potential card. If the rate is sailing well beyond the average, it’s time to look elsewhere.

2. Balance transfer charges.

Most credit cards offer the convenience of balance transfers, or the ability to consolidate debt onto a single credit card. This strategy can be a useful credit repair method, especially if your new card boasts a lower interest rate. That said, beware of the hidden fees. Some creditors place a mandatory 2-4% charge on transfers, adding to your balance and raising your credit utilization ratio. Why risk your credit health by paying for this service? Call your creditor and ask them to waive the fee. If they refuse, you may eventually want to find a new card.

3. Immediate APR hikes.

Bad habits come with heavy consequences. If you are prone to late bill payments, expect your creditors to inform the bureaus of your actions. If you are saddled with a bad credit card, expect to pay for your mistakes with an increased APR as well. Bad creditors are known to use the “default APR” rule with little-to-no warning. This rule allows them to raise your interest rates based on a trend of nonpayment or risky behavior. While the change in rate is arguably within your control, find a credit card that offers some flexibility in this area. For example, look for a card that will not raise your APR until 60-90 days of nonpayment. While this grace period will not save your credit score from damage, it will prevent compound interest from increasing your debt further. Everyone makes mistakes—keep yours from putting stress on your bank account.
Responsible spending and debt management are the cornerstones of good credit. If you are hoping to make a change, do business with creditors who demonstrate good track records. Credit repair is easier with an advocate at your side. Use their services to benefit your future.