Posted on November 9, 2009 at 10:53 pm While credit cards can be a great utility, overusing them can cause more damage than benefit. From the bunch of years I’ve spent monitoring the credit card industry, I can give you a thumb rule. Never take a credit card unless you are SURE of what it offers. You must be aware of introductory rates, annual fees, interest rate, late payment charges, and related expenses before signing up for a credit card. Apart from the conditions, here’s a list of few cards that you must avoid:   Prepaid Cards People that have a poor credit score can get such type of a credit card when they give cash deposit as collateral. Because of accepting cash deposit as a lending condition, credit card issuers that offer prepaid or secured credit cards charge consumers with high fees. You may realize after buying a prepaid card that a higher proportion of the monthly payment is going in fees or towards the interest and not lowering your principal balance. Therefore, it is good to stay away from prepaid cards.   Store credit cards Whenever you go to store, the person at the counter tries to sell you a store card that suggests ‘heavy’ discount on the next purchase. While the offer may be tempting, it is good to know the interest rates in advance. Generally, store credit cards have high interest rates, which may drag you into higher costs than originally promised savings.  Select store credit cards only when -          You have read the terms and conditions -          You are fine with the high interest rates -          You are confident that you will be able make monthly payments on time -          You know the late payment structure, etc.    Credit cards that do not share records with credit rating agencies The importance of reporting your credit card activity to the credit bureaus cannot be overstated. If the credit card issuer does not send your information to the credit bureaus, your credit score is unlikely to improve despite paying regular payments. And, if your credit score does not improve, there are remote chances that your credit worthiness will meliorate. So, in order to drive lender’s attention to your rising credit score, you must select only those credit cards that share your records with credit bureaus.   In conclusion, as a consumer you must carefully select your credit card to avoid bad experience in future. Careful selection will also keep you up with the changing financial scenario as well as maximize your rewards.  

Posted on November 10, 2009 at 1:47 am Thank you. This is helpful. but how about secured cards? what is your take on those?

Posted on November 10, 2009 at 3:43 am Secured cards help you rebuild your credit after you've filed for bankruptcy or when your other accounts have charged off. As long as you're making the regular payments monthly, you're good to go.

Posted on November 10, 2009 at 1:58 pm Secured cards are great, but make sure that they are issued by a reputable institution.  If there are any activation fees, membership fees on top of your deposit, then avoid it.  Check your local institution for a viable secured card.

Posted on November 11, 2009 at 10:29 pm @ mei_meiPeople who have bad credit history can apply for secured credit cards. The reason that secured credit cards are issued to people with bad credit history is because a fixed amount of money is deposited in a savings account as collateral against the credit card. This amount of money is the limit of your card. Financial institutions offer secured credit cards to people with bad credit history because their risk is lowered due to the presence of collateral money. This money can be used for the recovery of installments if the credit card holder fails to pay the installment. Once you have obtained a secured credit card, it is advisable that you try to improve on your credit history. This is the best time to make improvements. Try to make payments on time. Try not to delay payment or skip any as this will only add to your disadvantage. You can have secured card but ultimately you are providing collateral money to bank or financial institution. In opinion to me this is will help you to monitor & improve your credit history as well credit rating, once your credit history improves, you can apply for an unsecured credit card.Source: Money Matters