If you have a FICO score of lower than 600, you are considered to be someone with bad credit. One way to rebuild your credit is by getting a credit card and using it wisely. Knowing this, various credit card providers offer cards designed specifically for people with bad credit. While most of these cards come with high fees, interest rates, or restrictions, some are still recognizably better than others. Instead of helping people to rebuild their financial lives, some cards do more harm than good by charging exorbitant interest rates and hidden fees. See the following list of the worst offenders.
First Premier Bank MasterCard
On its website, First Premier Bank clearly shows who it is marketing its credit cards to with this line over its link to credit card offers: “Less than perfect credit?” Upon examining the “Fees, Rates, Costs, and Limitations” page for the basic unsecured Premier Bank MasterCard, the first thing that stands out is the APR: 36 percent! On top of that, it comes with a one-time $95 processing fee and a $75 annual fee that is immediately assessed against the card’s credit limit – taking the meager $300 limit down to $225 before you have even bought anything. After the first year, the annual fee drops down to $45. On top of these fees, there is a monthly “servicing fee” of $6.25. (Thankfully, this does not apply for the first year.) Cash advances each cost $6 or 5 percent - whichever is the greater of the two. The card also charges a $35 penalty for every late payment and $35 for returning items you have purchased with the card.
Centennial Secured MasterCard
The Centennial Secured MasterCard is also provided by First Premier Bank. As the name implies, it is a secured card – meaning that applicants must initially submit a security deposit. If the card holder later fails to make payments on the card, the provider may keep the security deposit. This card comes with an APR of 19.9 percent and an annual fee of $50. This annual fee is taken out of the initial credit limit, which is based on the security deposit. Therefore, by paying the minimum security deposit of $200, after the $50 annual fee has been taken out, you get an initial credit limit of $150. Like the unsecured First Premier Bank MasterCard, this card charges the greater of $6 or 5 percent for cash advances and levies $35 penalties for late payments and returned items.
Net First Platinum Merchandise Card
The Net First Platinum Merchandise Card purports to be a credit card with no credit check and guaranteed approval. It offers a $500 line of credit. However, it cannot be compared to other credit cards for two reasons. First, it can only be used to make online purchases at thehorizonoutlet.com, making it useless for those who want a credit card they can use at most stores. Second, while it does extend a line of unsecured credit, it does not report to the major credit bureaus. The Net First site explicitly says that Horizon Card Services – the provider of the card – is not a credit services or banking organization and that the card does not work through a major credit card company. Those who use it often complain of hidden fees and say that it is difficult to get rid of.
The Shack Card
Many retailers offer credit cards specifically for use at their stores. They may offer special perks such as discounts on specific products, but in general, such cards are some of the worst in the industry. The Shack Card from Radio Shack has notoriously high interest rates – varying 26.99 to 28.99 percent in normal situations and going up to 29.99 percent as a penalty rate. To be fair, Radio Shack does offer zero interest for the first six months if you make a minimum purchase of $150. The card also gives you a 15 percent discount on in-store battery purchases.
The Staples Card
Office supply store Staples also offers an in-store credit card. The interest rate for this card is about the same as that of the Shack Card at a variable 27.99 percent. Like the Shack Card, this card does come with a number of benefits for the frequent Staples shopper, such as free delivery on all orders and automatic enrollment in the Staples Rewards program. This program allows you to receive a number of discounts – such as a 10 percent discount on toner and printer/copier-related purchases. However, it is difficult to pay attention to these benefits with that interest rate hanging over them. Unlike the Shack Card, the Staples Card does not offer an introductory zero-interest period.
The Black Card is a Visa card marketed as an exclusive credit tool for those who spend a lot on luxury items. One way by which the Black Card maintains its supposed exclusivity is with its annual fee of $495. No, that is not the line of credit. That is the annual fee. To this, add an annual fee of $195 for each additional authorized user added to the account. However, despite the card’s claims of exclusivity, consumer reports have found that it is not all that exclusive. It is marketed to the general public, and people with poor credit and even low income sometimes get the card because they see it as a status symbol. It does come with a 0 percent introductory APR which is attractive. However, after the introductory term ends, the APR shoots up to 14.99 percent. If you miss a payment, the penalty APR is 30.24 percent.
If you are trying to rebuild your credit score, stay away from these credit cards. They could end up doing more harm than good to your credit profile.