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Features of the worst credit cards and how to avoid them

Bad credit doesn’t mean putting up with astronomical fees.

Updated

Fact checked

Credit cards for bad credit — also known as subprime cards — come in many forms. Unfortunately, these are often the worst credit cards out there. They frequently carry predatory terms with high fees and interest. Rather than helping you build your credit, a subprime card is just as likely to increase your debt and prevent you from building your credit. To avoid such cards, there are particular features you can look out for.

Features found in the worst credit cards

Read the fine print to find the things to watch out for. Here are some red flags:

1. Cards that don’t report to credit bureaus

Building your credit is one of the primary reasons for getting a credit card for bad credit. However, the worst credit cards often don’t report your card activity to the three major credit bureaus — Experian, Equifax and TransUnion. This makes it impossible to build your credit even with timely payments.

2. Cards with high interest rates

Some unsecured credit cards for building credit, and a few secured cards, come with astronomical interest rates of up to 35% on purchases and cash withdrawals. If you often carry your balance, this can make all of your credit card purchases expensive, and you could eventually end up in debt.

Special mention: store cards and cobranded cards

This type of card can sometimes be misleading. Keep an eye on the term deferred interest.

What this means is you get 0% interest rates only if you pay your balance in full before the promotional period ends. If you fail to pay your full balance by then, you will pay interest accrued from the moment you made your purchase.

Deferred interest by itself isn’t bad — it can actually be useful. Make sure to pay your full balance on time and you should be fine.

3. Cards with a high annual fee

The worst credit cards come with a jaw-dropping annual fee that can cost between $100 and $300. This is often the case with unsecured cards for bad credit where the card provider takes the risk of offering an unsecured credit to individuals with a low credit score or with no credit history. You shouldn’t pay this much considering there are no-annual-fee cards for building credit.

4. Additional fees

Another thing to keep in mind is additional fees. The worst credit cards can surprise you with their ingenuity on how to pocket more of your hard-earned money. If you’re not careful, you could end up paying hundreds — even thousands — of dollars on extra fees. Examples include:

  • Monthly program or maintenance fee
  • One-time processing fee
  • Additional card fee
  • Documentation fee
  • Credit limit increase fee
  • Express card delivery fee

5. No grace period on purchases

Some of the worst credit cards go even further — they start imposing interest rates from the moment you make the purchase. If you clear your balance in a day or two, it shouldn’t cost you much. But if you end up carrying your balance, your debt could quickly get out of hand.

6. Hidden information

This is a sneaky one. Often you’ll find the worst credit cards hiding most of the fees from their website. Sometimes, they will even make it hard to find the card’s terms and conditions before you apply.

To avoid unpleasant surprises, make sure you know all the fees before you apply for a card. And if you can’t find them? Skip the card.

7. No rewards program

The worst credit cards try to take your money without giving you anything back. Because of that, these cards never have a rewards program.

Compare credit cards for bad credit

Luckily, not all credit cards for bad credit are, well — bad. You can find some decent choices that can help you build credit, save money on interest and even earn rewards on your purchases.

Name Product Filter values Minimum deposit required Purchase APR Annual fee Recommended minimum credit score
OpenSky® Secured Visa® Credit Card
Starting at $200
17.39% variable
$35
300
Apply for this card with no credit check if you're new to credit or have bad credit.
OakStone Platinum Secured Mastercard®
Starting at $200
9.99% variable
$49
300
Build credit and enjoy an ultra-low APR on purchases of 9.99% variable with this secured credit card.
OakStone Gold Secured Mastercard®
Starting at $200
13.99% variable
$39
300
A secured credit card to help you build credit with a low APR on purchases of 13.99% variable.
Applied Bank® Secured Visa® Gold Preferred® Credit Card
Starting at $200
9.99% fixed
$48
300
No credit check is required for this secured card. Make a deposit of at least $200 to open this card and get a low 9.99% fixed APR on purchases.
Assent Platinum 0% Intro Rate Mastercard® Secured Credit Card
Starting at $200
0% intro for the first 6 months (then 12.99% variable)
$49
300
A rare secured card with a 0% intro APR on purchases for 6 months, followed by 12.99% variable.
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Compare up to 4 providers

Bottom line

If you have bad credit, it’s likely that you’ll stumble across one of the worst credit cards in the industry. To avoid applying for such a card, make sure you keep an eye on their features, including the annual fee, interest rates and fees.

Depending on your needs, you can build your credit with unsecured or secured credit cards. Make sure you compare your options until you find the right fit for your wallet.

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