Avoid these rubbish credit cards!

There are plenty of brilliant credit cards to choose from at the moment. But there are a couple of stinkers you should avoid as well!

One of the tasks I've undertaken over the last couple of months is to really get my act together regarding credit cards. And in the course of my research, I've found that while there are some cracking little credit cards out there, there's also a lot of tripe!

The balance transfer card

If you are on the hunt for a balance transfer credit card, it stands to reason that you will have a decent sized debt sitting on your existing card, and want to buy a little time to pay it off. That's why many credit cards give you a fairly decent 0% interest period to help you pay off that money.

So I'd suggest you avoid the many credit cards offering a paltry six months of 0% interest - including banks like Clydesdale and Bank of Ireland - as you can get more than double that from a host of different providers!

A better option: By far the best balance transfer card in the market is the Virgin credit card, which offers a huge 16 months of 0% interest. However, as the card is issued by MBNA, if your existing balance is on an MBNA card you might prefer to go elsewhere  - in which case I'd recommend the HSBC Bank Mastercard, which gives you 15 months interest-free.

A card for purchases

When it comes to making purchases, there are two things I look for in a credit card. First, I look at the period in which you get 0% interest on your spending. But I also look at the interest rate I will be hit with, should I not clear all of my debts before the promotional period comes to an end.

And the worst offender in this case is Northern Ireland's Northern Bank, with three separate offerings: its Standard credit card (charging 22.9% APR), its Gold credit card (charging a hefty 36.2%) and finally the Platinum card (charging an almighty 48.9%).

A better option: There are loads of cracking 0% purchase credit cards out there offering you a lovely long interest-free period on your spending. But the Tesco Credit Card is at the top of the tree, offering a whole year without interest. After a year you will face interest payments of 16.9%.

Rewarding your spending

If you do a lot of spending on your credit card, and always clear your balance in full, it might make sense for you to sign up to a reward card - getting cashback or collecting airmiles or points for each pound you spend.

Unfortunately there are a couple of cards out there offering this facility which are, in my humble opinion, completely naff.

One rubbish cashback card is the Smile Classic Visa, which offers a derisory 0.25% cashback. And should you make the mistake of not paying off your balance in full, you'll be slapped with an interest rate of 20.9%!

Another questionable card is the Barclaycard Goldfish Credit Card, which offers 0% for three months on purchases, and operates a points system - each £1 you spend gets you one point - with those points then redeemable for vouchers at a range of shops including Argos and Currys. However, you have to spend £250 before you get the equivalent of £1 in vouchers.

A better option:  Without question the best cashback card around is the American Express Platinum Cashback Card, which pays you a whopping 5% cashback over the first three months (up to a maximum of £100) and up to 1.25% thereafter (no maximum). However, recent changes mean it's not necessarily the best card for all of us - check out New top cashback credit card - for some of you! for the full lowdown.

A good alternative is the Egg Money Mastercard, which pays 1% cashback. But if you prefer to earn rewards for your spending then you might prefer to go for the British Airways American Express credit card, which gives you 1,000 bonus airmiles if you spend £500 on the card in your first three months, with a further mile for each £1 you spend.

Just remember to pay off your bill in full each month with these cards, otherwise you'll get hit with a hefty rate of interest.

Negative payment hierarchy

Regular readers of lovemoney.com will know just how much we can't stand credit card providers employing the sneaky trick known as negative payment hierarchy - ensuring that the money you pay each month goes towards your cheapest debts first and your most expensive last.

The trouble is that the vast majority of cards can catch you out with it - even some of the great cards I've already mentioned!

For example, while the Virgin card is untouchable for balance transfers, buy a new TV with it after having it for six months (by which point its 0% purchases deal will have expired) and any payments you make will go towards your interest-free balance transfer debt first, and not your purchases debt. Meanwhile, your purchases debt will be earning an interest rate of 16.6% - and you won't be able to pay anything towards this expensive debt until you've paid off your balance transfer in full.

A better option: Very few cards employ a positive payment hierarchy (i.e. paying off your most expensive debts first), but getting a card with identical purchase and balance transfer periods is one way around it.

And that card that I reckon is the best in the market is the Halifax All in One Mastercard, which offers a whole nine months of 0% interest for purchases and balance transfers. 

More: New top cashback credit card - for some of you! | Five top credit card freebies