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Credit One credit cards: Confusing for consumers
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Credit One Credit Cards: Confusing for Consumers
Are you suffering from bad credit and confused by Credit One credit cards? This isn't you.
Written by Ellen Cannon Ellen was an ex-credit card writer at NerdWallet. She was a writer for personal finance for more than two decades at Bloomberg as well as Bankrate.com.
Updated November 20 2020
Editor: Paul Soucy Lead Assigning Editor Credit cards, credit scoring, personal financial matters Paul Soucy has led the Credit Cards content team at NerdWallet since 2015. He worked as an editor at USA Today, The Des Moines Register and the Meredith/Better Homes and Gardens family of magazines for more than 20 years. He also established a profitable freelance writing and editing business with a focus on personal and business finances. He was editor of the USA Today Weekly International Edition for six years, and was awarded the top distinction of the year from ACES: The Society for Editing. He holds a bachelor's degree in journalism, as well as a Master of Business Administration. His home is in Des Moines, Iowa, with his fiancée, his two sons, and a dog named Sam.
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This page is not up to the date
Credit One has significantly overhauled its credit card offerings as well as its policies since the article was published. We're currently working on an update.
The best word for describing the cards offered through Credit One is confusing .
When you begin the process of applying, you don't know which type of card you're eventually going to get which includes crucial details such as rates, fees and rewards, or even if you get a .
When you send in an order on time, you don't know whether it will be credited to your account soon enough to avoid paying a late fee. The card issuer typically takes one week to process transactions, while many cardholders encounter problems paying online, as indicated by the report Credit One made to the Consumer Financial Protection Bureau and state regulators.
The credit card posted on the website of the issueran important source of information regarding any card -is a general statement designed "for informational purposes only" for Credit One. It isn't possible to read the exact terms of your credit card until you qualify for the card you want.
The issuer's name and logo are similar to those of better-known issues Capital One, which has made some people believe they were applying for a credit card issued by the latter.
Credit One markets credit cards for people with less-than-great credit. In its defense, the issuer says that in order to provide credit cards to as many of these subprime customers as they can, it has to do things in a different way than what you will find on cards for higher-credit consumers. It's fair enough however, the confusion is real so be warned and be careful when applying for.
Credit One offers three types of credit cards:
Credit One Bank(r) Cash Back Rewards Credit Card
Credit One Bank(r) Platinum Visa(r) for Building Credit
Applications: It's all about prequal
Some credit card issuers will allow users to . Prequalification is when you submit certain information and then the issuer conducts an instant check to determine whether you're likely to get accepted for a credit card. Prequalification does not affect your credit scores. Only a real credit application will trigger the "hard inquiry" which can reduce your score by a few points. But prequalifying also does not ensure that you'll be granted credit. It's like a "soft affirmative."
Prequalification is an option with the majority of issuers, but it's a crucial component of an Credit One application process. You must prequalify in order to learn the exact costs, rates, and reward structure of the card you'll be applying for. Once you see those terms, you decide whether to apply or not and then undergo the hard inquiry. The application review is more extensive than an "prequal" review, which means you may still be denied or accepted for a different terms that you did not see after prequalification.
>> MORE:
What is the reason they behave in this manner?
Credit One says this prequalification process protects subprime consumers, who are least able losing points from their credit scores.
In this case, let's say that an issuer provides three cards with annual fees that range from $99 to $45 and zero. A person with bad credit might qualify for the $99 card, but not the other two- but they would probably opt for the card with a zero fee first, followed by the $45 card, and then the $99 card as the last resort. Their credit score would suffer the impact of three applications instead of one.
Credit One however it could offer a single card with several possible combinations of rewards as well as fees and rates. The application process is one-time and the issuer then accepts the terms you want to use based the creditworthiness of your applicant. So there is a benefit, but there's also an additional hurdle to leap through. You don't know the terms you're receiving (or likely to get) until you've begun the application process, at which point you may be less likely to fail.
Rewards: Wait to see
Terms and Conditions stipulate that, based upon your creditworthiness you may be eligible for one of 6 cash-back reward programs. Here are the possibilities:
Credit One Bank(r) Cash Back Rewards Credit Card and Credit One Bank(r) Platinum Visa(r) for Building Credit
Cashback of 1% on food, gas and mobile phone service. internet service and cable and satellite TV.
1% cash back on groceries, gas and dining out, mobile phone service, internet service, cable and satellite TV service.
1% cash back on all eligible purchases.
Cashback of 5% for the first $5,000 a year for combined food, gas and mobile phone service. internet service, satellite and cable TV services as well as 1% cash back rewards on any other purchase.
NASCAR(r) Credit Card issued by the Credit One Bank(r)
1% cash back on car and gas purchases, and double cash back on NASCAR.com purchases.
Cashback of 1% on all purchases. Double money back when you make NASCAR.com purchases.
The truth is it's impossible to know what you'll earn in cash back until you get your card.
Rewards are automatically converted into an account credit every month, which means this part is pretty straightforward.
Rates of interest: They're okay
The interest rates cited in the "for informational purposes only" disclosure ranged from 19.74 percent to 25.74 percent as of August 2018. If you're a person with bad or limited credit, the interest rates you pay for any card or loan will be on the high side. The rates offered by Credit One are in line with those on typical credit cards that are designed for bad credit.
Annual fees: Make your guess
Like other features of Credit One cards, the annual cost you pay remains a mystery until the issuer qualifies you for a credit card. Your annual fee the beginning of the year would be "between $0 to $75." For the second year and beyond, the range increases to $0 and $99. In the following year after the beginning, your annual cost may be paid by monthly instalments. It could also be billed in one lump sum.
Certain Credit One credit card agreements -that are "real" the terms and conditions which will ultimately be applicable to cardholders are contained in . As of August 2019, the agreement outlined 21 various combinations of APRs, annual fees, and other card features. Again, the one that applies to you will be revealed only after you have been approved for a card.
Nerdy Tip
For certain Credit One cardholders, the annual fee is billed in monthly installments rather than all at once. That means they are required to pay the bill every month, even if they're not making use of the card. That, in turn, increases the chances of missing payments or making late payments due to the issues that many cardholders have with getting their payments promptly credited, discussed below.
Here are a few other fees you might pay (we use the word "might" because the "for informational only" conditions could differ from the terms on the credit card you're ultimately approved for):
Authorized user: $19 per year The authorized user must be 15 years old
Foreign transaction fee: 3% (minimum $1)
Cash advance: 5 (or 8%) of every money advance, which is higher or $10 or 3% of each cash advance, whichever is higher.
Late payment fee: up to $37
Returned payment fee: up to $35
Credit limit increase fee from $0 to $49
Fee for duplicate monthly statements: $10
Receipts for sales receipts: $6
Replacement card: $25
Fee for balance transfer: $5 or 8 percent of the balance transferred whichever is greater (if the card allows transfers at all)
Grace period: Who is sure?
For most credit cards, if you pay your account in full each month, you immediately receive an -- that's, you won't be charged any interest on purchases until the pay-day. Complete your monthly payments in full and then you'll never pay interest.
With the Credit One cards, however, you can't tell upfront what grace period. In the "for informational only" terms there's a section devoted to "paying an interest." It starts with "If your Account is subject to an Grace Period ..." That's an enormous "if." It continues to state that when your account is not subject to a grace period, you will be charged interest on each purchase from the time it is posted onto your credit card. Like most important information regarding Credit One cards, you will not know if you have any grace periods until you apply. Of 31 card agreements spelled out by Credit One as of August 2018, about half had a grace period.
Making payments: Confusion reigns
A NerdWallet investigation released in October 2018 found numerous complaints regarding Credit One that, because of an unintended loophole in the law of the United States was not apparent to consumers. The issue of payment is frequently mentioned in those complaints, as well as in posts posted in other forums.
Consumers describe sending in a payment before the due date but then having Credit One fail to process the payment until it was "late." In other instances, customers could not pay on credit card on the Credit One website and were forced pay via mail or phone, resulting in additional charges.
Credit One declined to comment on the findings of the investigation, however, its policies regarding processing payments seem to confirm the claims. The majority of credit card companies will make a payment available to a cardholder's account instantly. Credit One says it will keep your money for several days -- unless you chip in the equivalent of $10 to get it processed within a day.
When will your payment be credited?
Like any credit card, the balance on credit cards is based on the balance of your Credit One card is made from your purchases as well as cash advances (if they are available), interest as well as any fees added. The minimum amount you pay on Credit One cards is 5% of the amount. For most credit cards the minimum payment is 1% to 33% on the amount.
After one billing cycle, Credit One cardholders may contact Customer Service and choose their due date, as in the six days before or after the initial date. Cardholders may choose a different due date once every six months.
It appears that Credit One cardholders have to be extra cautious the way they pay their monthly payments. The "FAQs" section of the website says there are two options to pay your bill: "Standard Payment" and "Express Payment." From there, it gets difficult:
If you choose Standard Payment, according to the FAQ "your funds will become available within 5 (5) business days, and you will only be able to pay using your Bank Account." Five business days can be a challenge. Say your due date falls on the 15th day of the month and for a particular month, that 15th day falls on a Saturday. To avoid a late charge you'll need to make your payment on the 7th day of the month (a Friday) to be sure your payment will be processed in the "about five (5) business days" period. If you didn't pay 8 days earlier, in other words you might become "late."
If you opt for Express Payment When you make an Express Payment, your "funds will become available sooner (usually within the next business day)." However, the cost for Express Payment will be $9.95.
Even the terminology Credit One uses is peculiar. We've never come across a credit card agreement with wording about when "funds will become available." This kind of language typically applies to bank account deposits, so we don't know what it refers to in this instance. But we assume it indicates that the money will be posted to your account.
When does your available credit refresh?
But wait, there's more! Every one of the 21 card agreements contained in"the "real Terms and Conditions" document contain this paragraph:
In the event that an amount of payment is less than the principal amount outstanding on your Card Account, new credit will be available (subject to your credit limit) however, only 12 calendar days following our receipt of the payment.
This could mean that regardless of when you make your payment whether on time in the past, late, Standard or Express, or Standard -- you won't be able to access your total available credit line until two weeks following the payment. Say your credit line is $500, and you're maxed out. You've paid off your balance, but you're not able to use your card for 12 more days.
To get clarification to clarify the issue, we attempted to call to the "Application information" number provided by Credit One however, we could not make it past the first branch of the phone tree. It's because, to inquire regarding applying for a Credit One card, you need to input the 16-digit number of the Credit One card.
Consumer complaints
The Credit One cards are issued by Credit One Bank of Las Vegas which is a subsidiary of Sherman Financial Group, a private firm based within Charleston, South Carolina.
In addition to the complaints to government agencies uncovered by NerdWallet Payment problems are commonplace in complaints about Credit One credit cards on the website. Many reviewers say they tried to pay the bill online however, the Credit One website was not functioning. If they did make the payment, but it was not crediting the account in a timely fashion and resulted in a late charge. There are more than 1,000 complaints regarding the company as well as its service to customers on Consumer Affairs.
Complaints about Credit One on also touch the customer service, billing and payment issues. Of the 129 reviews on Yelp as of the month of February, 110 of them gave Credit One one of five stars.
The Better Business Bureau has not awarded Credit One a rating. From 112 reviews posted in February 2017 , on the website of the southern Nevada BBB Three reviews were classified as positive (although there was one review that review was distinctly negative) Three were classified as neutral and the rest as negative. Of 783 complaints logged on the site, 574 were identified as issues with billing or collection including payment problems.
Credit protection: Expensive
Another benefit that is touted by Credit One is its "Credit Protection Program." This is an optional program that waives the minimum payment due for six months in the event that the cardholder "involuntarily" goes out of work or becomes disabled. The cost of this service is 96 cents for each 100 of the balance to be paid. The cost is paid monthly following the time you have enrolled. If, for instance, you have a balance of $500 in one month and you're enrolled in the program, it costs you $4.80 in that month. If your balance for the following month is $400 then you'll be charged $3.84 the following month, and so on.
Once you enroll in the program, you'll have to go through an initial 30-day period of waiting before you can activate the coverage. After activation, your account is closed and you are unable to use the card. Additionally, the minimum payment is not charged, but interest will continue to accrue.
Also, Credit One has the option to terminate your enrollment in the event that your account is more than 60 days overdue or if your balance is 20% or more over your maximum credit amount, Credit One "no longer has control of the account," you've been guilty of fraud or are in any or more of Credit One Bank's debt management programs.
Other characteristics: Good
Since they are cards, cardholders are covered by Visa insurance for travel accidents and collision damage waiver for car rentals insurance. Additionally, the cards come with Visa zero fraud liability as well as the conditions and terms inform cardholders to notify any unauthorized charges within a few hours. The law in the United States sets the maximum liability for cardholders at $50 in the event of unauthorized charges however, Visa zero fraud liability is a guarantee that Visa zero-risk liability ensures that you are not responsible for charges that are fraudulent.
The cards provide free credit scores, however you can get your credit score for free almost everywhere nowadays -- . Some credit card issuers offer you a score for free even when you're not a cardholder.
You can select from an array of designs (23 for the rewards card, 20 for the rebuilding credit card) to "personalize" your credit card, however, you will have to pay a fee for this option. The fee isn't disclosed on the Terms and Conditions that are available on the site.
Alternatives to better alternatives: Many
Considering the opaque terms and other disadvantages associated with Credit One cards, you might wonder why so many people sign up for the cards. One answer might be that people think that they're applying to a credit card issued by Capital One. That logo, which is swooshy, from Credit One actually predates CapitalOne's, but there's still confusion in the marketplace. Customers who have complained on the Consumer Affairs website mentioned this issue frequently.
Credit One cards are marketed to those with poor credit scores, however, better alternatives are available to those with or . Major issuers provide secured credit cards with better terms, lower fees and guaranteed grace periods. Secured cards require an initial security deposit of at least $200-$300. The process of putting that money together may be a problem in some cases, but bear in mind that you get the money back when you shut down the account or switch to a regular unsecured card. The charges that are charged to you by Credit One are not refunded.
For instance, the pays cash back of 2% up to $1,000 in spending on restaurants and gas every quarter. It also gives 1% cash back on all other purchases. Additionally, after having maintained your credit card in a responsible manner for seven months, Discover might review the card with an eye toward making it an unsecure card. Additionally the annual fee, it's zero dollars .
You may also be eligible for a genuine Capital One card, the . It is possible to get a 200 credit line with a deposit of $49, $99 or 200, and you can make the deposit in installments prior to opening your account. You may be able to access a larger credit line, without having to put more money down if you make payments on the timeframe of six months. And there's no annual fee.
If your credit is good or average and you have a good credit score, you may be eligible for the . This card is unsecured and offers unlimited 1.5 percent cash back on purchases, with a affordable annual cost.
If credit is not available the consumer may make poor choices, such as applying for credit with a Credit One credit card without researching their options. Look around, and you'll discover better options -- with terms and conditions that are clear and clearly stated.
About the author: Ellen Cannon is a former NerdWallet writer covering credit cards. She has been a writer also editor with Bloomberg as well as Time Inc.
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