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.