When looking for getting out of debt these days, it is just as important to avoid getting a bad credit card as it is to actively look for a good one. Companies (especially the ones that offer amazing reward schemes) like to throw in all kinds of hidden charges – such as annual fees, high interest rates, and even charging you for withdrawing money at an ATM.
CC companies actually make most of their money through interest payments from people that cannot afford to pay off their monthly bills. Getting the ‘best’ credit card is subjective, since it’s really about getting the best card for you (as opposed to the best on the market). In the same respect, the idea of a bad credit card is also relative to you and your situation, since what may be bad for one person can be extremely helpful to another – it all depends on your circumstances.
With this in mind, if you think you might be one of those people that struggles to pay off their monthly payments (at least every now and then) you might be best getting a card with a low level of interest (preferably zero interest, if possible) instead of one that offers fancy rewards.
There are now several CCs on the market that offer 0% interest on purchases for a up to a year. This means that as long as you pay off the purchase within 12 months, you don’t have to pay any interest at all! This can be extremely useful when purchasing expensive items, or when trying to minimize debt. Saying that, it is vitally important that you budget accordingly, since if you fail to make the 12 month payment deadline this amazing miracle card will turn into a very bad credit card overnight!
The ‘Discover Platinum Card’, is one of the most highly rated interest-free ones on the market with 0% interest on purchases for 12 months, has no annual fee and can even give you up to 5% cashback on certain purchases! Their entry requirements are pretty low, so don’t worry too much if you have bad credit.
Typical bad credit cards to avoid are the ones that offer you some kind of novelty reward or gift for signing up – the kind of thing that you will rarely (if ever) use. For example, there are several banks in the UK that offer students a free popcorn maker when they take out one from these companies. Obviously the APR is sky high, so these are the kinds of things to be avoided.