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Stolen from MSN.com,,,The world's worst credit cards


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Monstrous fees, high interest rates, disappearing rewards . . . credit card companies are battering consumers across the board. But no cards are worse than these.

By Liz Pulliam Weston

MSN Money

If you have a credit card, chances are pretty good that your deal got worse in the past year.

Maybe your rate went up or your credit limit went down, or the issuer gutted the rewards program. It's just going to get uglier, as I told you in "Banks have declared war -- on you."

Still, it may make you feel a little better to know there are much, much worse credit card deals out there than the one you have.

Unless, of course, your card is one of those singled out by the three experts I consulted -- Curtis Arnold of CardRatings.com, Justin McHenry of Index Credit Cards and Bill Hardekopf of LowCards.com -- to find the worst of the worst.

Here are their nominations:

The worst retail card

Macy's Card

Cards offered by retailers and specialty stores are usually a bad deal, but Macy's still manages to stand out.

"Almost without fail, (retail) cards charge exorbitant interest rates. The worst offender I know of is the Macy's credit card, with its 23.99% interest rate," McHenry said, "but cards from J.C. Penney, American Eagle Outfitters, Gap, Brooks Brothers, J. Crew and Dillard's all come in at rates over 20%.

Many people apply for retail cards to get a discount on their purchases, typically 10% to 20% off. But you can often get the same benefits and a better overall deal by applying for a store card that's affiliated with a major credit card brand.

"If you really want a store credit card, try to get a store card associated with Visa, MasterCard or American Express -- those cards generally have interest rates lower than the store-only credit cards," McHenry said. "For example, I just got a Banana Republic Visa with an interest rate of 14.24%. Compare that to Banana Republic's store-only card, which charges a rate of 21.9%."

If you don't carry a balance -- and you shouldn't -- the interest rate doesn't matter, but you'll still benefit from a card you can use in more places.

The worst cash-back card

Money Return Platinum Plus Visa from Bank of America

If you pay your balance in full, cards that offer cash rebates are usually a terrific deal, as I wrote in "20 credit cards that pay you back."

Not this one.

Oh, the terms look sweet at first: no annual fee, 0% for six months on balance transfers and a whopping 10% cash rebate.

You get the 10% cash back, however, only if you carry a balance. And the annual percentage rate for carrying a balance ranges from 9.99% to 19.99%."So you pay up to almost a 20% APR to earn (back) only 10% of your interest that you pay out of your pocket," said Arnold, of CardRatings.com. "Doesn't take a math genius to figure out that this is a lose-lose proposition."

The worst subprime card

Centennial Gold MasterCard from First Premier Bank

Once again, there are plenty of awful options in this category that caters to folks with bad credit, but the Centennial Gold MasterCard distinguishes itself in a crowded field.

"This subprime card boasts a 9.9% fixed rate, an amazing rate for any subprime offer," Arnold said. But when you look under the hood, you find a nest of fees:

A one-time account set-up fee of $29.A one-time program fee of $95.

An annual fee of $48.

A $7-a-month servicing fee, which equals an additional $84 per year. "So, if you get approved for a $250 line (of credit), you are out $256 in fees during your first year of card membership and only have $71 available credit your first month," Arnold noted. "What a rip!"

It's cards like this that caused Congress to rewrite the rules on fees as part of the new credit card reform bill, McHenry noted. After February 2010, issuers won't be able to charge fees equal to more than 25% of a card's limit.

The worst secured cards

New Millennium Bank Secured Gold Visa or MasterCardNew Millennium Bank Secured Platinum Visa or MasterCard

Secured cards, which offer credit lines equal to the deposits made by borrowers, will likely become a better option than subprime cards as lenders flee the subprime market.

Just make sure to pick a secured card other than these.

Hardekopf summarizes the "features" of the platinum cards: "A $59 annual fee. A $99 processing fee. A 19.5% (interest rate) for purchases and balance transfers. And no grace period."

Yup, that's right. Even if you pay your balance in full every month, you'll still owe interest charges on anything you charge.

Talk back: Have you been abused by a credit card company?

Similar fees, terms and rates apply for the gold versions. Arnold said most secured cards have annual fees of $20 to $40, and he'd never heard of an "application processing fee" for a secured card.

"Secured cards are often the most consumer-friendly option for many consumers seeking to build or rebuild their credit," Arnold said. "But this secured card is anything but consumer friendly."

The worst prestige card

Visa Black Card issued by Barclays Bank

McHenry's beef with this card? The whopping annual fee.

This card "attempts to use marketing fluff to convince people to pay $495 per year for a card that offers little more than other cards that are free or have nominal fees," McHenry said.

For example, the card's rewards program is a basic 1% cash-back or points plan that's no different from many no-fee cards, McHenry said. The card promises concierge service and access to airport lounges, which "might be nice but isn't particularly unique."

Barclays is obviously trying to piggyback on the aura of hard-to-get prestige cards such as American Express' black Centurion card.

"To me it's a cynical marketing ploy," McHenry said. "Charge a high fee for a supposedly prestigious card that's no better than average and see how many people will assume that it's better because it costs more."

The worst marketing for an otherwise OK card

American DreamCard MasterCard issued by HSBCI added this category mostly to please Arnold, who is profoundly irritated by this card. And boy, does he have a point.

The rates and terms for the American DreamCard are actually pretty good for its target market of folks with battered credit, Arnold said. It's the message that disturbs.

The American DreamCard encourages you to spend so that you'll earn "entries" to win "large monthly cash jackpots!" These jackpots grow depending on how much people spend, and you can win more entries by encouraging your friends to get the card.

HSBC touts this as "the credit card program that can make people rich!" Which is probably a better tag line than "an apocalyptically horrible idea to encourage gambling through overspending! Oh, and let's suck your friends in, too!"

Liz Pulliam Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "Your Credit Score: Your Money & What's at Stake." Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

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