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Credit One Credit Cards: Confusing for Consumers
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Credit One Cards from Credit One: Confusing for consumers
Are you suffering from bad credit and confused by Credit One credit cards? The problem isn't with you.
by Ellen Cannon Ellen was an ex-credit card writer at NerdWallet. She wrote about personal finance issues for over twenty years for Bloomberg and Bankrate.com.
Updated Nov 20 2020
Editor: Paul Soucy Lead Assigning Editor Credit scoring, credit cards Personal finance 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 practice that focuses on personal and business finance. He was editor of the USA Today Weekly International Edition for six years and won the top distinction of the year from ACES: The Society for Editing. He holds a bachelor's in journalism and a Master of Business Administration. The family lives in Des Moines, Iowa, with his fiancée, his two sons, and the dog named Sam.
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Credit One has significantly overhauled its credit card offerings and its policies since this article was written. We're currently working on an update.
The most appropriate word for describing the cards provided by Credit One is confusing .
When you start the application process it's difficult to know what kind of card you're eventually going to get -- including important details such as rates, fees and rewards, or even if you get a .
When you send in a payment in time, you don't know whether it will be credited to your account soon enough so that you don't pay a late charge. The card issuer typically takes a week to process payments however, many cardholders experience problems paying online, as indicated by the report the Credit One made an inquiry to Consumer Financial Protection Bureau and state regulators.
The credit card posted on the site of the issueran important source of information about every card -is a general statement designed "for solely informational purposes" on Credit One. It isn't possible to read the exact terms of your credit card until you are able to qualify for the card you want.
The issuer's name and logo are like those of the well-known issues Capital One, which has caused some customers to believe they were applying for a credit card issued by the latter.
Credit One markets credit cards for people with less-than-great credit. To defend itself, the issuer says that in order to provide credit cards to as many 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. True, but the confusion is real, so beware and be careful when applying for.
Credit One offers three types of cards:
Credit One Bank(r) Cash Back Rewards Credit Card
Credit One Bank(r) Platinum Visa(r) for Building Credit
Applications Prequalification is all about
Many credit card issuers allow the possibility of . Prequalification is when you submit certain information and then the issuer conducts an instant check to determine whether you're likely approved for a card. Prequalification does not affect your credit scores. Only an actual credit application results in a "hard inquiry" which could knock points off your score. Prequalifying doesn't guarantee that you'll eventually be granted credit. It's similar to a "soft yes."
Prequalification is optional with most issuers, but it's an integral part to an Credit One application process. Prequalification is required to know the specific costs, rates, and rewards structure of the card you're applying for. Once you see those conditions, you have to decide whether to apply and if so, you will be subject to a hard inquiry. The application review is deeper than the "prequal" exam, which means you may still be denied, or you could be accepted for a different terms than what you saw following prequalification.
>> MORE:
Why are they doing it in this manner?
Credit One claims that this prequalification procedure is designed to protect consumers who are subprime, and who are the least likely to lose points off their credit scores.
In this case, let's say that an issuer offers three cards with annual charges that range from $99 to $45 or zero. A person who has bad credit might qualify for the $99 card but not for the other twohowever, they'd likely apply for the $0 card first, then the $45 card, and then the $99 card as the last option. Their credit score will suffer the impact of three applications, rather than just one.
Credit One, by contrast may offer one card with the possibility of a dozen combinations of rewards, fees and rates. The application process is one-time, and the issuer approves the terms of your application based on your creditworthiness. So there is a benefit, but there's also another hurdle to go through. And you won't know the terms you're receiving (or likely to receive) until you've already begun the application process in which case you may be more likely to not have to make a bailout.
Rewards: Wait and watch
Terms and Conditions stipulate that based the creditworthiness of your score, you may be eligible for one of six cash-back rewards programs. These are the options:
Credit One Bank(r) Cash Back Rewards Credit Card and Credit One Bank(r) Platinum Visa(r) for Building Credit
Cash back of 1% on food, gas mobile phone service, internet service, cable and satellite TV services.
Cash back of 1% on fuel, groceries and dining out, mobile phone service, internet service, cable and satellite TV service.
Cash back of 1% on eligible purchases.
5% cash back the first $5,000 for combined gas, groceries, mobile phone service, internet service, as well as satellite and cable TV as well as 1% cash back rewards on all other purchases.
NASCAR(r) Credit Card from Credit One Bank(r)
Cashback of 1% on car and gas purchases and double the cashback on NASCAR.com purchases.
Cash back 1% on all purchases and double money back when you make NASCAR.com purchases.
The bottom line is that you won't know how you'll earn cash back until you have your card.
Rewards are automatically redeemed as credits to your statement each month, which means that part is fairly straightforward.
Interest rates: They're OK
The interest rates cited in the "for informational purposes only" disclosure ranged from 19.74 percent to 25.74% as of August 2018. If you're in the middle or have limited credit, the rates that you'll be charged on any card as well as loan will be high. Rates at Credit One's are comparable with those on typical credit cards designed for bad credit.
Annual fees: Make a guess
Like other characteristics of Credit One cards, the annual cost you pay remains a mystery until the issuer has you qualified for a card. The annual cost for the initial year is "between $0 to $75." For the second year and beyond, the range increases to $0 to $99. Following the initial year, the annual fee could be charged by monthly instalments. Or it might not.
Some Credit One credit card agreements -- "real" the terms and conditions which ultimately apply to cardholders -- are contained in . At the time of writing, in August 2019, the agreement outlined 21 different combinations of APRs annual fees, and other features. Also, the one that applies to you will be made public only once you qualify for a card.
Nerdy Tip
For some Credit One cardholders, the annual fee is billed in monthly installments, rather than all at once. This means that they will have a bill to pay each month even when they've not been using the card. This, in turn, increases the chances of missing payments or making late payments, especially considering the problems many cardholders report with having their payments credited in a timely manner which is discussed further below.
Here are a few other charges you may have to pay (we use the word "might" because the "for informational only" terms may be different from the terms on the card you're ultimately authorized for):
Authorized user: $19/year; authorized user must be 15 years old
Foreign transaction fee: 3% (minimum $1)
Cash advance: $5, or 8 percent of each money advance, which is greater, or $10 or 3percent of every money advance, or whichever higher.
Late payment fees: up to $37
Returned payment fees: up to $35
Fee for increasing credit limit from between $0 and $49
Fee for duplicate monthly statements The fee is $10.
Receipts for sales receipts for $6
Card replacement Card replacement: $25
Balance transfer fee 5 percent or 8 percent of the balance transferred whichever is greater (if the card allows transfers in any way)
Grace period: Who is sure?
For most credit cards, when you pay off your account in full each month, you automatically get an -- that's you'll not be charged any interest on purchases until your next pay-day. Make sure to pay in full every month, then, and you'll never be charged any interest.
For the Credit One cards, however it's impossible to tell in advance whether you get a grace period. In the "for informational purposes only" conditions the card's terms include a section about "paying an interest." It starts by saying "If your Account is subject to grace period Grace Period ..." That's an enormous "if." It goes on to say that when your account is not subject to a grace period, you'll be charged interest on each purchase up until the point it's posted to your account. Like most important information about Credit One cards, you won't know whether you get any grace periods until you apply. Of 31 card agreements spelled out by Credit One as of August 2018, about half included a grace period.
Making payments: Confusion reigns
A NerdWallet investigation that was published in October of 2018 discovered thousands of complaints about Credit One that, because of an unintended loophole in the law of the United States was not apparent to customers. The issue of payment is frequently mentioned in the complaints as well as in posts made on other forums.
Customers report sending in a payment before the due date only to see Credit One fail to process the payment until it was "late." In other instances, the customers weren't able to pay via credit card on the Credit One website and were forced pay via mail or phone, resulting in additional fees.
Credit One declined to comment on the findings of the investigation, but its stated policies on processing payments seem to confirm the allegations. The majority of credit card companies will make a payment available to a cardholder's account immediately. Credit One says it will hold your payment for several days unless you chip in the equivalent of $10 to have it processed within a day.
When will your credit card be creditable?
Like all credit cards, the balance on your Credit One card is made from your purchases as well as cash advances (if any) plus interest, as well as any fees applied. The minimum amount to pay for Credit One cards is 5 percent of the balance. For most credit cards, the minimum payment is anywhere from 1% to 33% of the balance.
After one billing cycle, Credit One cardholders may contact Customer Service and choose their own due date as long as it's within six days of the original date. Cardholders may choose a different due date once every six months.
It appears it is the case that Credit One cardholders have to be extra vigilant how they pay their monthly payments. The "FAQs" section on the site says that you have two choices for making your payment: "Standard Payment" and "Express Payment." From there, it gets tricky:
If you select Standard Payment, in accordance with the information in this FAQ "your money will be available within five (5) working days, and you can only make payments through your Bank Account." Five business days is a long time. If your due date falls on the 15th 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 by the 7th of that month (a Friday) in order to ensure that your payment will be processed within the "about five (5) business days" timeframe. If you didn't pay eight days early that is, you could be "late."
If you select Express Payment When you make an Express Payment, your "funds will become available sooner (usually on the next working day)." The cost for an Express payment is $9.95.
The wording Credit One uses is peculiar. We've not seen an agreement for credit cards with specific language about when "funds will become available." This type of language typically applies to bank account deposits, so we don't know what it refers to in this instance. We're assuming it means when the payment will be posted onto your credit card.
When does your available credit renew?
But wait, there's more: Every one of the 21 card agreements in the "real Terms and Conditions" document include this section:
If an amount of payment is less than the principal amount due on your Card Account, new credit will be made available (subject to the credit limit) however, only after 12 calendar days following our receipt of the payment.
This seems to indicate that no matter when you pay for your loan -- on time, late, Standard, Express -- you can't access your total available credit line for nearly two weeks following the payment. Say your credit line is $500 and you're at the limit. You pay off your balance, but you're not able to utilize your credit card for 12 more days.
To get clarification to clarify the issue, we attempted to call to the "Application Information" number listed by Credit One however, we could not get past the first branch of the phone tree. That's because to ask a question about applying for a Credit One card, you must enter the 16-digit number of your Credit One card.
Consumer complaints
The Credit One cards are issued by Credit One Bank of Las Vegas which is a subsidiary to Sherman Financial Group, a private company based within Charleston, South Carolina.
In addition to the numerous complaints to government agencies uncovered by NerdWallet payments issues are common in complaints regarding Credit One credit cards on the site. A lot of reviewers have reported that they tried to pay the bill on the internet, but the Credit One website was not functioning. Or they made the payment, but it wasn't debited from the account in time and resulted in a late fee. There are more than 1,000 complaints about the company along with its support for customers Consumer Affairs.
Complaints about Credit One on also touch the customer service as well as billing and payment issues. Of the 129 reviews on Yelp at the time of Feb. 2017, 110 of them gave Credit One one five stars.
The Better Business Bureau has not awarded Credit One a rating. Of 112 reviews as of February 2017 on the site from the Southern Nevada BBB Three reviews were classified positively (although the tone of one review was clearly negative) three were classified as neutral , and the remainder as negative. Of the 783 complaints that were reported on the site, 574 were identified as related to billing or collection, which includes payment problems.
Credit protection: Expensive
Another benefit touted as a benefit by Credit One is its "Credit Protection Program." It's an optional program that will waive the minimum amount due for six months in the event that the card holder "involuntarily" is laid off or disabled. The cost of this service is 96 cents for every hundred dollars of balance to be paid. You pay this every month after you enroll. If, for instance, you have a balance of $500 one month and you're enrolled in the program, it costs you $4.80 for the month; and if your balance for the following month is $400, you'll be charged $3.84 in that month and so on.
When you sign up for the program, you'll have to go through an initial 30-day period of waiting before you can activate the coverage. When you activate the program, your account will be closed and you can't use the card; the minimum amount of payment is waived however, interest will accrue.
Additionally, Credit One has the right to cancel your enrollment if your account is 60 days late or if your balance is more than 20% over the maximum credit amount, Credit One "no longer is the owner of the account" you've committed fraud, or you're in one the Credit One Bank's debt management programs.
Other features: Excellent
Since they are cardholders, they get Visa insurance for travel accidents and car rental collision damage waiver insurance. Additionally, the cards come with Visa zero fraud liability, along with the Terms and Conditions inform cardholders to notify any unauthorized charges within a few hours. While federal law limits cardholder liability to $50 for charges that are not authorized and Visa zero fraud liability is a guarantee that Visa zero-risk liability guarantees you won't be responsible for charges that are fraudulent.
Credit cards are free scores, but you can obtain your credit score for free almost everywhere these days -- . Some credit card issuers offer you a score for free even when you're not a cardholder.
You can choose among a range of options (23 for the rewards card and 20 for the rebuilding credit card) to "personalize" your credit card, but you will have to pay a fee for that option. The fee isn't disclosed in the terms and conditions available on the site.
Alternatives Better alternatives: Many
Considering the opaque terms and other disadvantages associated with Credit One cards, you may wonder why people are so eager to apply for the cards. One answer might be that consumers think the application is for a line from Capital One. That logo, which is swooshy, from Credit One actually predates Capital One's, but there's still confusion on the market. Customers who have complained via the Consumer Affairs website mentioned this problem frequently.
Credit One cards are designed to those with poor credit scores, however, better alternatives are available for people who have good credit or . Major issuers provide secured credit cards with more favorable terms, less fees and guaranteed grace periods. Secured cards require a security deposit of $200-$300. Getting that money together can be a challenge to some people, however keep in mind that you will get this money back when close the account or upgrade to a normal unsecured card. The charges paid to you by Credit One are not refunded.
For example, the card offers cash back of 2% of up to $1000 on food and gas each quarter, and 1 percent cash back on all other purchases. Plus, after you have maintained your credit card in a responsible manner for seven months, Discover might review the card in the hopes of making it an unsecure card. On top of that, its annual fee is zero dollars .
You might also qualify for a genuine Capital One card, the . It is possible to get a 200 credit line with a minimum deposit of $49, $99 or $200, and you can pay the deposit in installments before activating your account. You could be able to access a larger credit line without having to put more money down , if you pay on time for as little as six months. Also, there's no annual charge.
If your credit is average or fair, you could qualify for the . The card that is not secured offers unlimited 1.5% cash back on purchases, with a minimal annual fee.
When credit is limited the consumer may make poor decisions, such as applying for credit with a Credit One credit card without conducting their research. Look around, and you can find better choices that have conditions and terms that are clearly spelled out.
About the author: Ellen Cannon is a former NerdWallet writer covering credit cards. She was a journalist as well as an editor for Bloomberg as well as Time Inc.
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