Not every credit card that’s a bad deal in 2011 is one that preys on the person who has bad credit. Credit card companies are plying their trade for both ends of the economic spectrum. They target the rich and they target the poor. Either way there is money to be made and worst credit cards to avoid. Are you a target?

Worst Credit Cards Targeting the Wealthy

Some of the worst credits cards available in 2011 are directed at the rich and famous. You’ll have to decide whether it’s really worth the privilege of looking like you have arrived or not.

Premium Bank’s Visa Black Card claims to offer a set of exclusive services that make it comparable to holding the American Express Centurion Card. In reality, it’s a mere shadow of Amex’s black card. According to MSN Money, there are premium cards that give you almost as many services as this card does without the stiff $495/yr. fee. All they fail to offer is the “prestige” of using the black card for purchases and concierge services.

Concierge services can be useful for card holders who travel extensively, but this benefit is worthless for someone who doesn’t.  Money managers on multiple credit card sites recommend evaluating whether this service would really be worth $495/yr before upgrading to a Visa Black credit card.

Worst Credit Cards Targeting the Poor

There are horrible credit cards out there for the credit challenged as well. The First PREMIER® Bank Credit Card is one of the worst partially-secured credit cards on the market. You have to make a deposit of $95.00 as security to access $300 in credit.

You don’t dare carry a balance with this card. The APR is 49.9%. This is in addition to a $75.00 first year annual fee. And if you think that’s a bad deal, that’s just an introductory price. Each year thereafter, you pay $120.00 to keep your credit card.

This just highlights the importance of shopping carefully if you are in a lower income bracket, have no credit or need to restore your credit. This kind of deal isn’t going to help you get ahead very quickly!

Take the time to shop carefully for credit card offers. No need to establish credit is so vital that it is worth becoming a slave to such lenders.

Do you want an exclusive credit card? Then you need to fit into a specific financial profile. You may also fit a psychological profile as well, a profile exclusive credit card issuers are targeting.

Financial Profile for Exclusive Credit Cards

The “high roller” cards as some call them are invitation only cards. You have to already spend the kind of money the credit card issuer wants you to spend on their exclusive cards. For example, an American Express Centurion Card, also known as the “Black card,” is only offered to customers who are already Platinum card holders and who have spending habits of $250,000 a year.

The requirements to get Barclay’s Bank’s Visa “Black” card aren’t quite as stiff. You just have to fall in the top 1% of American income earners.

Both cards offer concierge services and other bonuses geared to help you feel that the fees are worth it. The American Express “Black” card costs $2,500 per year, plus a first year initiation fee of $5,000.00. The Barclay’s “Black” card has a $495.00 annual fee.

The other exclusive credit cards available globally aren’t offered in the U.S. They all share the same exclusivity feature, though, of only being available to a limited group of people that fit certain income profiles.

Psychological Profile for Exclusive Credit Cards

There is psychology at work in the marketing of these exclusive credit cards. It can make you feel like you have finally arrived to receive an offer to one of these exclusive cards. You can guarantee that the offer is couched in terms that make you feel like you can be even more successful with their card in your wallet.

In addition, credit card issuers recognize that using plastic disconnects you from your money. If your income levels fit their profile, they are happy to leverage that disconnect to their benefit.  If you operate in a money fog, they don’t mind keeping you there as long as you are paying the bill on time.

A study by researchers from Cornell University and the London School of Economics, points to another psychological trait the credit card companies don’t mind using. They know that buying things you want, rather than things you need make you feel good. And while there’s no official study to prove it, being treated as someone who is worth special services bolsters self-confidence as well.

In many cases, you can avail yourself of most of the “perks” of the exclusive credit cards without the high yearly fees. Shop around among the platinum credit card offers on the market. You may find that you can get most of the psychological benefits of carrying plastic in your wallet, with as high a price tag.

There are four primary ways that your credit card can be compromised. Understanding how your credit information becomes compromised and taking the proper steps to prevent compromise can save you hours of time clearing up fraudulent charges, etc.

Identity Theft

If you’ve ever lost your purse or wallet, don’t assume that all is well if the wallet is turned in. All the information in your wallet, including your credit card info can be copied. Even your checking account information can be taken.

An “honest” identity thief can do a lot of damage with the information in your wallet. They don’t have to keep the plastic in their possession to cause harm, or to steal your identity.

Place a credit freeze on all your accounts. Not only should you report the loss to the individual card issuers, notify the credit reporting agencies. The harm an identity theft can cause you is significant, so you want to be proactive anytime there is a risk your information may have been compromised.

Illegal Copying – Credit Card Skimming

A dishonest employee can swipe your credit card through a machine called a skimmer. The skimmer reads all the numbers and information on your credit card, enabling the crooked employee to sell the information. Information that is skimmed can be used to create counterfeit cards, order things on the internet or even place phone orders.

The best practice is to never allow your card to leave your sight. At fast-food drive-up windows observe whether or not you can see the card-swipe machine. If you can’t, don’t use your debit or credit card. Instead, plan on using walk-in service the next time you frequent that fast-food eatery. In restaurants, never place your credit card on the tray to have the cashier process the transaction for you. Take the time to pay in person.

Phishing Emails

You can’t depend on your email spam filter to catch all of the fraudulent emails that pretend to be from your bank or credit card issuer. This makes it important to recognize what a phishing email looks like.

First, a phish looks like official email. It will use the credit card’s logo. It will have a url that is very close to the official banking site.

Second, a phish asks you to “confirm” information the bank already has. This is your warning that this is a phishing email. Remember, you bank has all this information and doesn’t need to send out messages asking you to “confirm” that the information on record is correct.

If you adhere to the following principles, you will protect yourself from phishing risks.

• Never give out your credit card number, Social Security number , your account password or the name of the primary account holder unless you initiated the call to a number you know is secure. Most credit cards now only ask you to reveal the last four digits of your Social Security number.
• Never click on the link of an email you suspect may be a phishing email. It is better to call your credit card issuer and ask questions. The number will be on the back of your credit card.
• Never share the security code on the back of your credit card unless you have initiated an order. A criminal may call and provide you with all of the rest of your credit card information, even account password, and still be seeking to defraud you. Now that most internet and even phone transactions require this piece of information, this is a valuable piece of information that can protect you from becoming a victim of credit card fraud.

Other Things to Watch

• When you receive a new credit card, activate it immediately. Then sign with permanent black ink. The advice that has been passing around the internet that you write “Ask to See ID” isn’t as good as it seems. An identity thief will have their ID instead of yours, so the lack of your signature on the card works against catching the crook.
• Reconcile your accounts daily if possible. This makes it easier to identify fraudulent transactions before they escalate into multiple transactions.
• Never let your wallet or purse out of your sight.
• Switch to electronic billing and payments to reduce the risk of your credit card information falling into the wrong hands. If you do use the mail, consider using a post office box, or a locking mailbox to reduce the risk of statements falling into the wrong hands.
• Shred credit card offers so they cannot be used to open fraudulent accounts.
• Never enter your credit card information to access a “free” site. You don’t know who will charge you for the “free” transaction.

These are all practices that can protect you from credit card fraud. Put them into practice.

Credit cards come in two types—store retail cards and bank cards such as Visa and MasterCard. It’s been recognized for a long time that store retails cards are never as good a deal as bank cards, though there are some bank cards that rank up there as the worst credit cards of all time. A smart credit user needs to recognize some of the tricks credit card issuers use to make you feel like you are getting a good deal when you sign on for their credit card.

Store/Retail Credit Cards – Beware

According to MSN’s Money column, Macy’s has the worst retail credit card in the marketplace. If you carry a balance, you’ll pay 23.99% interest. Picture what this means to you. If you haven’t paid off your purchase in a year, you will have come close to paying 25% more for it. Let’s say you bought a $100.00 dress. At the end of the year that dress will cost you $123.99.

Don’t be fooled by the 10 to 20% discount you are offered to open up a credit card account. That’s only the first time you purchase something. Unless you are a very disciplined person who pays off you account every month, that’s the only time you will save any money.

In general all of the store brand credit cards aren’t going to help your credit situation improve. They make it easier to spend more than you have. And having too many retail credit cards tends to hurt your FICO score.

Cash-Back Rewards Cards

You’d think a cash-back reward card would be a great deal. But it isn’t always. Bank of America came out with a credit card it called the “Money Return Platinum Plus Visa.” What was the hook? You got 10% cash back ONLY if you carried a balance on your credit card. Considering that the 10% cash back was promised against anywhere from 9.99% to 19.99% interest on the balance you owed, you had to play it pretty slick to benefit from this credit card deal.

The only way you could break out ahead on this deal was to charge a lot, and pay off enough of the balance each month to just break even on the minimum monthly interest fee. It’s far more likely that the deal only reduced the effective interest rate to 0% to 9.99%. Very few people got ahead with this deal.

Cash back is a great deal. Just make sure there aren’t any hidden stipulations in the small print. And don’t let the cash back lure you into making purchases that are unnecessary. It’s only a deal if you really need it.

Subprime Credit Cards

There’s always a new horrible offer ready to pop up, but one of the worst the market saw, and probably one that lit some fire under the CREDIT CARD Act, was First Premier Bank’s Centennial Gold MasterCard. This subprime card offered a 9.9% fixed rate. On the surface, this was a fantastic interest rate for a subprime credit card.

What made this credit card a horrible value was the add-ons and the low credit limit. The set-up fee of $29.00 may not have seemed too high, but there was also a program fee of $95, an annual fee of $48.00, and a monthly service fee of $7.00. You paid all this just to have a credit limit of $71.00. Unfortunately, there were people who were desperate and gullible enough to take advantage of and offer that was really taking advantage of them.

Secured Credit Cards

New Millennium Bank has the reputation for issuing the worst secured credit card offers of all time. Fortunately, some of the tricks this bank used aren’t legal anymore. They charged annual and processing fees to open the account. The interest rates were high, and they charged interest whether or not you paid your balance off in full each month.

It’s important to shop carefully no matter what credit card you choose. Understand the difference between the different types of credit cards and shop carefully. If all you can get is a subprime credit card, take the time to compare deals and learn how to use the credit card to your advantage instead of the issuer’s. If you need to rebuild your credit, choose the best secured credit card offer.

No matter who the credit card issuer is, recognize that they offer credit to make money. If you aren’t careful, they will make more money off you that you want them to.

It’s usually the case. The company that develops a technology first doesn’t remain at the head of the pack. Look at Apple Computer. Had the best operating system out there, but Microsoft had the best marketing strategy.  Apple’s still with us, but it will never capture the market share Microsoft has.

When it comes to the credit card industry, much the same effect has taken place. While the U.S. invented the initial credit card processing technologies, foreign countries have added transaction enabling technologies that are making their way back to the U.S.

Whether these transaction technologies make it more attractive to the credit card issuers to offer more low-interest credit cards might be questionable. Yet, there are reasons to believe these technologies make it easier for consumers to manage their credit responsibly. That’s something that helps consumers attract those lower interest rates.

According to First Data, a payment processing company, there are four technology trends that are going to really make a difference for consumers.

1)      Mobile payments. Many credit card issuers are looking at replacing the credit card entirely. Your mobile phone would become  your credit card. This convenience is a tool many busy consumers can leverage to improve their handling of finances.

2)      Multifunction cards. Picture a card that looks about the same as the low-interest credit card you carry in your wallet right now. But even though it looks similar, it’s really a smart card with a multiple functions included. The card may link to your debit and credit card accounts. You choose how a transaction is processed. If your checking and credit cards are all with one bank, there’s the potential for useful money management tools arising out of this technology.

3)      Contactless cards. These are the wave and pay cards many Americans already have in their possession. Use is limited by the number of vendors using the technology. All you have to do is hold the card near the data reader.

4)      Improved fraud protection features. New technologies such as “rolling codes” encryption and PIN-enable cards with ultra-thin buttons on the fact of the card are just two of the new methods for reducing fraudulent credit card transactions.

While none of these technologies guarantee credit card companies are going to start issuing more low-interest credit cards, some of these technologies do reduce the risk to both the consumer and the credit card issuer.  Lower risk creates a more profitable environment for the credit card issuer. Will that savings be passed on? Only time will tell.

Are you one those people who like to live on the extreme edge? Then credit card arbitrage is the extreme way to net some extra money. But beware! If you take one misstep, you would do more than lose money. You could destroy your credit as well.

What is Credit Card Arbitrage?

Credit card arbitrage is a practice where you take advantage of a credit card company’s offer of 0% interest. You take a free or low-interest loan from the credit card company and invest the money in a high-yield savings account.

You make the minimum payments each month on your credit card. Then when the interest rate is just about to reset, you withdraw enough money to pay the credit card off. The interest you earned in the high-yield savings account is your profit from the transaction. (Keep the interest in the bank and put the power of compounding to work for you while you’re at it.)

Are the Benefits Worth It?

Anyone who has ever had $1,000 in a savings account and seen how much money they earn in interest in a month, knows that credit card arbitrage doesn’t bring in very much money. Today’s high interest accounts are promising 1.03% in interest annually. That translates to about $0.85/thousand/month.

That’s not much money! That doesn’t sound like you would make enough to help you pay off any debts. You might be surprise to discover that some very savvy, credit card arbitragers report profits of $2,500 over three years. That’s not an amount to ignore!

How do they do it? They are able to access larger lines of credit. Multiply that $0.85 by a $10,000 credit line. You make $850.

Most credit card arbitragers say there is a feeling of satisfaction that comes from making money off the credit card companies. After all, they’ve probably made a lot of money off consumers in the past.

Steps You Must Take if You Dare.

Here are some factors you need to consider before you try to make money off the credit card companies.

1)      Be sure there are no fees for using the checks the credit card company provides. Many companies now charge a minimum transfer fee. Because the rate is usually 4 or 5%, you could find yourself losing money if the offer lasts less than a year. You have to compare the “spread” between the fees and the money you’ll make in the high-interest savings account.

2)      You need to be comfortable with calculating the “spread” between the interest rate you will earn and the interest you will be charged. It’s this “spread” that determines how much profit you make.

3)      You must be extremely disciplined with your finances. There is no room for mistakes here. You must make all monthly payments on time. And you must pay the credit card off before the rate goes up. Using the automatic payment option is a very useful tactic.

4)      You need to keep careful records. You will lose at this game if you don’t keep track of all your transactions. A spreadsheet that tracks all your payment due dates, terms and final pay-off dates is essential.

5)      Remember that payments can be delayed, even electronic ones. Plan to pay off each credit card at least 7 days before the payment due date. It’s not worth taking chances.

Credit arbitrage can yield profits. Yet, don’t run out and start taking advantage of credit card offers unless you are an organized person. If you haven’t been disciplined in the past, practicing arbitrage could lead to a worse financial condition, rather than a better one.

You must be an individual who pays attention to detail. The fine print can trip you up. One forgotten payment can erase all your profits. It’s a game where skill is required!

In today’s market, exclusive credit cards are also expensive credit cards. Yet, this doesn’t seem to matter. The wealthy love the security of plastic. When those exclusive credit cards bring along services and benefits, those who have money, or want to look like they have more money than they really do, are enticed to partner with the credit card providers who give them what they want.

Who has the money?

According to Tower Group, 1% of the wealthiest Americans only account for 4% of all the credit card dollars racked up each year. These are the 2 million households that make more than $1 million a year. So why are the credit card companies rolling out exclusive credit cards to this much smaller market? They know this market is the safest market right now.

Higher Credit Scores

High-end credit card holders usually have near-perfect credit scores. This means they have proven they know how to manage their money. That can be very comforting to a credit card issuer. When someone holding an exclusive credit card spends money, even if the interest rate is only 12 – 13% APR, the credit card company makes money.

Consider this as well. Add on top of the interest income, the money the credit card issuer actually convinces you to pay to hold that piece of plastic in your hand. There are services promised in exchange, but that price tag often isn’t cheap.

Annual Fees

American Express refuses to reveal anything more about its Centurion card, aka The Black Card, other than to say the annual fee is $2,500. That’s not the same fee a qualifying individual has to pay just to open the account. That’s an additional fee of $5,000. Unconfirmed reports say you have to spend at least a quarter of a million dollars every year to keep the card.

Some banks, such as Coutts & Co. cater only to the most elite of elite British subjects. Their purple card is only used by invitation and only by the most important and wealthiest individuals in Great Britain. Rumor has it that Queen uses this highly exclusive credit card.

Typical Perks

Cards like the Stratus White Card, Citigroup’s Ultima Card and Visa’s Infinite Card all offer perks to enhance the value proposition for their high-end users. Perks typically make international travel more comfortable. Full-time concierge service is common.

The location of issue can influence the nature of the add-on benefits. For example, Asian holders of the Citigroup Ultima Card can arrange for one-day use of an 80-foot luxury Ferretti yacht. They can access a Bentley limousine with chauffer for the day, or use a Maserati 4200 Spyder for 48 hours.

South African customers holding Visa’s Infinite Card aren’t offered such luxurious amenities, but can expect concierge, travel insurance, assistance, and discounts on shopping and cultural events. A guided tour through wine country hosted by a recognized wine maker is also offered.

How Wealthy is Wealthy Enough?

As far as Barclay’s bank is concerned, you have to belong to that 1% we mentioned at the beginning of this article. It may only cost you $495/year to have their carbon card, but you have to prove you belong to that top group of Americans who not only earn the bucks but know how to manage them as well.

Of course, you don’t’ have to have one of these exclusive credit cards in your wallet to prove you know how to manage your money. You can start to build your stellar credit rating with any type of credit you use. If you manage your money carefully no matter how much of it you have, you can always have the dream of being invited to use one of the exclusive credit cards one day in the future.

According to a report released by Fox News on June 3, 2011, the Credit CARD Act has had a negative effect on the issuing of low-interest credit cards.  It’s definitely harder to get low-interest credit today.

The interest rates the credit card issuers were willing to grant credit card holders went up before the Act passed in anticipation of the losses the law would cause. Those rates haven’t come back down. Here are some of the effects you may feel if you apply for a low-interest credit card.

You have to earn more to qualify.

Credit card companies are moving away from considering household income as a basis for issuing credit cards. This means you need more than a good credit rating to get a lower interest rate. You also have to earn more in comparison to your living expenses. It’s possible that credit card issuers are concerned that your bills may have to be covered by you alone if your spouse loses his or her job. Unfortunately, that’s been far to common a problem in the last few years.

Your spouse may be denied credit.

Watch out families where one spouse stays home with the children! While you may be able to secure a low-interest credit card, if your spouse isn’t working, he or she may be denied because your income doesn’t count any more. You can still give your spouse a card to carry in the wallet. He or she may be able to run up charges to your account, but it won’t help his or her credit rating, even if your spouse is the one who manages the money.

Higher Low-Interest Starting Point

In early 2009, average interests rates on credit cards stood at 14%. Since December 2009, those average rates have remained at 16% or above. While you can still find low-interest credit cards at 9.99% APR (read 10%), they aren’t as easy to find. And as mentioned already, you’ll need both good credit and the right income level to qualify.

Higher Transaction Costs

The Credit CARD Act has also had a continuing impact on the fees you pay on your low-interest Credit Cards. You are more likely to see higher foreign transaction fees, inactivity fees and minimum finance charges that are higher than they were in the past. Fortunately, late fees remain stable, so you aren’t likely to have any new surprises if you are late on a payment.

Lower Credit Limits

One of the side effects of securing a low-interest credit card may be a lower credit limit. Smaller banks are your best bet for finding a low-interest credit card that doesn’t restrict your credit limit as much. The big banks are taking less risk, while the smaller banks are stepping in to fill the vacuum.

The Credit CARD Act has had an effect on the availability of low-interest credit cards. It’s an impact that isn’t likely to go away soon.

Credit card companies are looking at risk before they issue credit cards today. So even though you may only have one account that you’ve been late on, that late payment history could have an impact on your interest rates going forward.

It may be comforting to know that credit card companies no longer have the right to throw your account into a default APR because you were late paying your cell phone bill, but that late payment could still show up on your credit report—the first place credit card companies go to evaluate how risky it is to do business with you.

Raising Future Interest Rates Perfectly Legal

The credit card issuer may not be able to raise rates on your existing balances unless you are late with their company personally, but the credit card company has the right to review your credit report to see whether you remain the same risk as before. If there are any signs that you have having trouble with other creditors, you can be sure that you will receive a notice that your rate is going up.

What you do when that happens is up to you. You have the right to refuse the new rate, which means you must commit to not using the credit card, ever. As soon as you do, the new rate will apply to all new purchases.

Start Improving Your Credit History Today

Whether you already have a good credit rating or need to improve it, the following tips will help you attain a better credit rating.

1. Make sure that you check your credit report for anything that isn’t accurate. If there are errors, you have the right to have them corrected. Dispute any errors with the credit bureau and reporting agency.
2. Always pay on time. Use automatic payments unless you know the risk of bouncing a transaction remains high. Then your strategy must be to set up dependable payment reminders for yourself. This is easier now that the law mandates that the payment date must be the same every month. Remember that most transactions take up to 5 days to clear your bank, so plan on making payments five days in advance of the due date.
3. Make every effort to reduce how much you owe. Even if you have had a few late payments in the past, if you reduce your debt to credit limit ratio, it will go a long way toward raising your credit score.

Your credit history is the key to getting the best interest rates available. It is also the cause of undesirable interest rate increases.

Remember it’s legal to use your credit score to evaluate your risk for non-payment, so do the things that protect your FICO score—Pay on time, avoid too many credit cards, and keep your debt to credit limit ratio down to about 1/3 debt to 2/3 unused credit. It’s a recipe for preventing undesirable interest rate increases.

While the Credit CARD Act of 2009 brought in some sweeping changes to the way credit card companies do business, it didn’t eliminate every loophole. There are still ways for your credit card issuer to raise the rate on your existing credit balances. Here are the things you want to be sure you do so you don’t face higher interest rates than you expected.

Never Get More that 60 Days Past Due

Your interest rates on existing balances are only protected as long as you remain current on your payments. If you fall behind by more than 60 days, your credit card issuer has the right to reset your interest rate to the default rate in your credit card agreement.

The new law does offer you some protection though. After six months of making on-time payments, the credit card company must revert to your prior rate. The only catch is that the payments must be on time.

If you schedule your payments automatically, you need to watch carefully for automatic payments that are scheduled for weekends. The credit card issuer (who determines when the automatic payments are drawn) should not penalize you for a payment it didn’t process by the due date.

The law states that payment dates that fall on weekends or holidays must be extended to the next business day. If a fee is charged, it should be reversed, and your record should still show timely payments. If not, the law has been violated, and you should complain.

Pay Attention to Teaser Intro Rates

When a credit card company lures you into a credit relationship, you need to recognize those low opening interests rates are teaser rates. They aren’t going to last.

Make sure you know when the initial interest rate expires. It can’t be less than six months. And be sure you know what the real APR will be after that. The credit card issuer doesn’t have to notify you that your rate is going up. When you entered into the credit card agreement, it was assumed you knew that the rate would go up and when.

Military Duty Rates

If you are a member of the military and are on active duty, your interest rate is capped at 6% for as long as you are actively serving. But the credit card company doesn’t have to warn you that your rate is going to go back up to your previous APR when you come back home. Try to use active duty pay to reduce your debt burden if at all possible.

Prime Rate Increase

If your APR is based on the prime rate, your interest rate will go up and down. Because your rate is tied to an index, the credit card company doesn’t have to notify you of these often monthly changes.