Credit card deals that can lead to bad credit history

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Building Credit History » Credit card deals that can lead to bad credit history

Credit card deals that can lead to bad credit history


Updated: December 26, 2012

You can obtain a lot of good credit card deals, given the recent competition amongst various credit card issuers to get as many new card accounts opened as possible. However, as a cardholder you must pick and choose, because some credit card deals could really hurt your credit rating. On the outside, these credit card deals are packaged and promoted well, but in the long term they can turn out to be bad options. If you are in a phase where you want to improve your credit history or in a phase where your credit history is just about fair, these deals should be totally ignored. Balance transfer with high APR later A balance transfer offer, with 0% APR for a year could be a very tempting offer. But if you have an outstanding debt in the tune of $5000 and the APR on the credit card after the introductory period is going to be 25%, alarm bells should be ringing in your ears already. This is because unless you are planning to pay back the $5000 within the year, you could be faced with a debt with a high interest rate that can accumulate very fast, undoing the benefits offered by the 0% APR. In fact, it would be a better idea to go for a low interest rate credit card, where the APR will be constant. Credit card rewards that offer discounts If a credit card is offering you 50% discount for a particular brand, and you spend at least $500, it is not a very beneficial credit card. This is unless it is the holiday season and you had plans to spend that kind of money. Otherwise, you are looking to spend $500 dollars to save $250, but you are still giving away $250 where you didn't need to. Therefore, it is wise to stay from such offers and avoid shopping with these offers when you haven't planned to. Credit cards with variable interest rates Credit cards with variable interest rates should be strictly avoided if you have a bad credit history. These credit cards can significantly increase your outstanding balance, and worsen your credit rating, because you can never be sure the exact interest on the debt. With the recent credit card reforms, issuers are using variable rates as a strategy to bend some of the rules and hence should be best avoided. Bonus points for targets There are credit cards which will offer you a bonus discount of around $100 if you spend around $700 - $800 in the first 3 months. This target could vary, but it can make you spend that much more to save those $100. Once you have a debt of about $600 after the discount and you cannot pay it back, you are hurting your credit rating, because your outstanding balance will now have to bear the burden of the interest and the late fees too.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Top 5 Cards for Travel from Our Partners Winter 2017/18 – Expert Choice

Top 5 Cards for Travel from Our Partners Winter 2017/18 – Expert Choice

Posted: December 8, 2017

Nights are drawing out, the wind is colder every day and you already feel the lightest breath of winter on your face - autumn is here. Holidays are over, kids are back to school and all you are left with are hefty holiday bills that you ... Continue reading
Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Posted: December 1, 2017

If you're trying to find the perfect rewards credit card, you might feel like you're drowning in options. There are just so many out there, and many of them look similar. This can make it tough to decide on a card. One thing people often ... Continue reading
Credit Card Tips For Holiday Shopping 2017

Credit Card Tips For Holiday Shopping 2017

Posted: November 27, 2017

November and December are the busiest months as gift shopping reaches its peak. People rush around looking for the best gifts and the best deals leaving a lot of money in the shops. Holiday season may force you to go over the household ... Continue reading