Capital One No Hassle Cash Rewards MasterCard (For Limited Credit)

This card is a much more expensive version of Capital One's cash-back rewards card designed for people with excellent credit.

• People with limited credit histories who want to earn cash rewards on their credit card spending.

Credit Rating Required

• Fair and up (660+).

Pros

• Generous cash-back rewards.
• No balance transfer fee.
• Flexible rewards redemptions.

Cons

• High annual fee.
• High APR.

Rewards

• 2 percent cash back on purchases at gas stations and major grocery stores, 1 percent on all other purchases.

APRs

• 0 percent for first nine months on purchases, then 19.8 percent.
• 19.8 percent from day one on balance transfers.
• Penalty interest rate: 29.4 percent.

Fees

• Annual fee: $39
• Late payment fee: $15 to $39.
• Over the limit fee: $29 (No fee if credit limit remaining is under $500).
• Return check or payment fee: $39.
• Balance transfer fee: zero.

Capital One states fairly prominently on its website that "this card is for people with a limited credit history." The card has the same rewards package as Capital One's cash-back rewards card for people with excellent credit, but the high annual fee and high APR make it much less attractive.

The Capital One No Hassle Cash Rewards MasterCard pays two percent cash back on purchases made at gas stations and "major" grocery stores, and one percent everywhere else. The $39 annual fee on this card basically means you earn no rewards on the first $3,900 of spending (at the one percent cash-back rate; no rewards on the first $1,950 assuming two percent cash back).

This version also carries a $29 over-the-limit fee; the version for excellent credit doesn't carry that fee. However, there's no fee if your remaining credit limit is under $500. (You avoid an over-the-limit fee by opting-out.)

The card has the same flexible rewards redemption feature as the card for excellent credit. You can redeem your rewards upon request, automatically at a set time each year, or automatically when you reach a specific threshold such as $25 or $50. You can also redeem your cash for gift cards starting at $20. You must notify Capital One which option you want.

There is no balance-transfer fee, but the high APR on balance transfers - which takes effect on day one - negates that benefit. Besides, you should never carry a balance on a card where you're trying to earn rewards.

It's hard to recommend a cash-back rewards card that carries an annual fee since, as is the case with this card. Your first nearly $4,000 of spending will only help you earn back the annual fee. You're better off applying for a no-fee card - such as Discover - that might be easier to get even if the rewards package isn't as generous. You'll net out better in the long run.