Like all things in life, there are good credit cards and bad credit cards, and the difference between the two of them isn’t always abundantly clear. A bad credit card isn’t so easy to spot with a passing glance and that’s exactly something creditors use to their advantage. Now, it’s not to say that the majority of credit cards are in it to trick you outright but sometimes a credit card is less on your side than you might think. Read on to see what the top 3 signs of a bad credit card are and three things you can try to help build up your credit.
Watch out for: High fees and APRs
It’s not hard to find the information about the fees and APR associated with a given credit card right as you’re signing up; if you’re doing it online, you’ll be able to view a page prior to confirming your application that outlines all of the dues, fees, and interest rate information.
Typically high fees and interest rates are usually high as they are because creditors assume that those with low credit scores won’t shop around for better options. Their assumption is that someone with bad credit won’t care whether or not they’re setting themselves up to pay potential fees and interest rates that are higher than average simply because they’re excited to be approved for a card at all.
Watch out for: A creditor that doesn’t report to all three bureaus
There are three major credit bureaus in which your credit card details are reported to. Those institutions are Equifax, Experian, and TransUnion. Your details (such as your credit line, balances, and payment history) are important components that make up your FICO credit score. If a credit card issuer chooses to only report to one credit bureau, this can affect your credit score because not all bureaus may receive the same information about your payment history.
For example, if a creditor reports your information to TransUnion but not Equifax and Experian, your credit score may not reflect the most accurate representation of what your credit standing actually is. That is why it’s important to check your credit reports at least once a year from each bureau, if not twice a year to make sure all the information is up-to-date and correct. If you end up finding missing or incorrect information on any credit report, you then need to contact that credit bureau immediately. Also, make sure to keep detailed records of your communication and correspondence with them.
Watch out for: Special offer credit cards in the mail
At times, card issuers will target consumers with poor credit with mail offers and pre-approvals because they believe they will make a tremendous return on those types of consumers as they tend to run up balances; and the card issuer can also charge interest rates topping at 20% per year. With nearly one-in-three Americans with subprime credit scores (below 620 FICO), there are plenty of candidates for these promotions.
If you’re looking to improve your credit score, here are three things you can try:
Become an authorized user on another card
One of the simplest ways to rebuild poor credit is to become an authorized user on another credit card. Another solution, if available, would be to find someone to be a co-signer on the credit card thereby leveraging their higher credit rating.
Community bank or local credit unions
Another option for rebuilding credit is to solicit the aid of a community bank or local credit union. Oftentimes, these establishments will work to help you strengthen and bring up your credit by potentially offering you special credit-builder loans or even their own credit cards that have better overall rates.
Secured credit cards
Secured credit cards can also be a great stepping stone on the road to building better credit. Secured credit cards are simply credit cards that have been initially backed by your own cash deposit. If you can manage to make all of your minimum payments on time, you should then ask your credit card issuer to convert your secured card to unsecured after a year. It is even better if you can maintain available credit on your secured card. Remember to shop around for your secured credit card, and if you are going to be carrying balances consider then the Progress Platinum Prestige card where their annual fee of $49 per year is offset by an APR of 9.99%.
Want to keep track of all your credit card spending and make smarter decisions on all your card purchases? Be sure to download the Card Curator app today! Download the app in the Apple App Store or on Google Play.
Written by John Garner John Garner is the founder & CEO of Card Curator. John spent 5+ years as a volatility trader for Merrill Lynch before deciding to start Card Curator and follow his real passion: credit card rewards and travel. To date, he has visited almost 90 countries by using rewards earned from 100+ credit cards. He’s an expert in all things related to credit cards and free travel, and loves helping others crack the code in the points and miles game.