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Credit One credit cards: Confusing for consumers

 

 

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Credit One Credit Cards: Confusing for Consumers

 

Have 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 covered personal finance issues for more than two decades at Bloomberg and Bankrate.com.

 

 

 

 

 

 

Updated Nov 20 2020

 

 

 

Editor: Paul Soucy Lead Assigning Editor Credit scoring, credit cards, personal financial planning Paul Soucy has led the Credit Cards content team at NerdWallet since the year 2015. He served as an editor for USA Today, The Des Moines Register and the Meredith/Better Homes and Gardens family of magazines for over 20 years. He also established a profitable freelance writing and editing business that focuses on personal and business finances. He was editor of USA Today Weekly International Edition for six years, and was awarded the most prestigious honor of the year from ACES: The Society for Editing. He holds a bachelor's in journalism as well as a master of Business Administration. He lives in Des Moines, Iowa, with his wife, two sons and a dog named Sam.

 

 

 

 

 

 

 

 

 

 

 

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This page is not up to date

 

Credit One has significantly overhauled its credit card offerings as well as its policies since this article was written. We're in the process of updating.

 

The best way for describing the cards offered through Credit One is confusing .

 

As you begin the application process it's difficult to know which type of card you'll end up getting that includes important information such as rates, fees or rewards, and even if you'll get a .

 

When you send in an order at the time you want, you don't know whether it will be crediting your account in time enough so that you don't pay a late charge. The company typically takes about up to a week to process your payment however, many cardholders experience problems paying online, as indicated by the report credit One submitted for the Consumer Financial Protection Bureau and state regulators.

 

The credit card posted on the issuer's website -an important source of information regarding any credit card -is a generic statement that is intended "for solely informational purposes" for Credit One. It isn't possible to read the actual terms of your card until you qualify for a specific card.

 

The name and logo of the issuer are like those of the well-known issues Capital One, which has led some consumers to think they're applying for a credit card issued by Capital One.

 

 

Credit One markets credit cards to people who have less-than-perfect 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 however, there is a lot of confusion, 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 The key is prequalification

 

 

Many credit card issuers allow users to . By submitting prequalification, you give some basic information and then the issuer conducts an instant check to determine whether you're likely to be approved for a card. Prequalification isn't a factor in your credit scores. Only a real credit application will trigger the "hard inquiry" that can reduce your score by a few points. But prequalifying also does not assure you that you'll ultimately be granted credit. It's similar to prequalifying as a "soft no."

 

Prequalification is optional with most issuers, but it's an integral part to the Credit One application process. It is necessary to prequalify to know the specific charges, rates and reward structure of the card you'll be applying for. When you've read the terms, you decide whether to apply and incur the hard inquiry. The application review is more extensive than the "prequal" review, so you could still be rejected, or you could be granted a different credit card that you did not see following prequalification.

 

>> MORE:

 

Why do they do it in this way?

 

Credit One says this prequalification process safeguards consumers with subprime credit, who can least afford to lose points off their credit scores.

 

As an example, suppose that an issuer provides three cards with annual fees that range from $99 to $45 or $0. Someone having bad credit might qualify for the $99 card, but not the other two -however, they'd likely apply for the $0 card first, then the $45 card and then the $99 card for a final alternative. Their credit score would be affected by three applications instead of one.

 

Credit One is, in contrast it could offer a single card with a dozen potential combinations of rewards charges, rates and fees. The application process is one-time and the issuer then accepts you for terms that are based on your creditworthiness. So there is a benefit, but there's also an additional hurdle to leap through. And you won't know what you're getting (or likely to receive) until you've begun the application process and at that point, you may be less likely to fail.

 

Rewards: Wait and watch

 

 

These terms and conditions stipulate that based the creditworthiness of your score, you can be eligible for any of the 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

 

1% cash back on groceries, gas and mobile phone service. internet service and cable and satellite TV service.

 

Cashback of 1% on fuel, groceries or dining out purchases and mobile phone service internet service and cable and satellite TV service.

 

1.1% cash back on eligible purchases.

 

5% cash back the first $5,000 per year in combined spending on gas, groceries and mobile phone service. internet service, and cable and satellite TV service and cash-back rewards of 1% on all other purchases.

 

 

NASCAR(r) Credit Card issued by Bank Credit One Bank(r)

 

Cash back of 1% on automotive and gas purchases. Double money back for NASCAR.com purchases.

 

Cash back 1% on all purchases. Double the cashback on NASCAR.com purchases.

 

 

The main point is that it's impossible to know what you'll earn in cash back until you get your card.

 

Rewards are automatically redeemed as an account credit every month, so that part is fairly straightforward.

 

Interest rates: They're OK

 

 

The rates for interest in the "for informational purpose only" disclosure were 19.74% to 25.74 percent in August 2018. If you're in the middle or have low credit, the interest rates you pay for any card and loan will be on the high side. The rates offered by Credit One are comparable with typical credit cards that are designed for bad credit.

 

Annual fees: Take an educated guess

 

 

As with other key characteristics as well as other features Credit One cards, the annual fee is a mystery until the issuer qualifies you for a card. The initial year is "between $0 between $75 and $0." For the next year and beyond the range increases to $0 and $99. Following the initial year, the annual fee may be paid in monthly installments. However, it may not be.

 

Certain Credit One credit card agreements -- "real" the terms and conditions which will ultimately apply to cardholders are included in . As of August 2019, it listed 21 different combinations of APRs, annual fees, and other card features. Also, the one that applies to you will be disclosed only after you qualify for a card.

 

Nerdy Tip

 

For some Credit One cardholders, the annual fee is paid in monthly installments, instead of all at once. That means they are required to pay the bill every month, even though they're not making use of the card. This, in turn, increases the chance of not making payments or making late payments particularly when you consider the issues some cardholders experience with having their money promptly credited, discussed below.

 

 

 

Here are a few other charges you may have to pay (we refer to them as "might" due to the fact that the "for informational only" terms could be different from the terms on the card you're ultimately accepted for):

 

Authorized user: $19/year The authorized user must be 15 years old

 

Foreign transaction fee: 3% (minimum $1)

 

Cash advance: $5 (or 8%) of each money advance, which is greater, or $10 (or 3%) of each cash advance, whichever is greater

 

Late payment fee: up $37

 

Fee for returned payment: up to $35

 

Fee for increasing credit limit From Zero to $49

 

The fee for duplicate statements on a monthly basis: $10

 

Receipts for sales receipts For sale receipts: $6

 

Card replacement: $25

 

Fee for balance transfer of $5 or 8 percent from the total balance transfer the greater amount (if the card is able to allow transfers at all)

 

 

Grace period: Who knows?

 

 

On most credit cards, when you pay the account in full every month, you immediately receive an -- which means, you won't be charged interest on purchases until your next deadline for payment. Pay in full each month and then you'll never be charged any interest.

 

With credit cards like the Credit One cards, however, you can't tell upfront what grace period. In the "for informational purposes only" conditions there's a section devoted to "paying the interest." It starts with "If your account has an Grace Period ..." That's an important "if." It continues to state that if your account has no grace period, you will pay interest on every purchase from the time it's posted onto your credit card. Similar to the majority of important details about Credit One cards, you don't know if you are eligible for an extension of grace until the time you make an application. Of the 31 agreements for credit cards spelled out by Credit One as of August 2018, about half were grace periods.

 

Making payments: Confusion reigns

 

 

A NerdWallet investigation released in October 2018 found thousands of complaints about Credit One that, because of a loophole in the federal law was not apparent to consumers. Paying issues are frequently discussed in the complaints as well as in posts made on other forums.

 

Consumers describe sending in payments prior to the due date only to see Credit One fail to process the payment until it was "late." In other cases, consumers could not pay on Credit One's website. Credit One website and had to pay by telephone or by mail, incurring additional charges.

 

Credit One declined to comment on the findings of the investigation but its stated policies on processing payments appear to verify the claims. The majority of credit card issuers transfer a payment to the cardholder's account instantly. Credit One says it will keep your money for a few days until you deposit an amount of nearly $10 to get it processed within a day.

 

When will your credit card be creditable?

 

Like all credit cards you will have a balance on credit cards is based on the balance of your Credit One card is made up of your purchases, cash advances (if they are available), interest as well as any fees charged. The minimum payment on Credit One cards is 5% of the balance. For most credit cards the minimum amount is anywhere from 1% to 3percent on the amount.

 

After one billing period, Credit One cardholders may contact Customer Service and choose their own due date as in the six days of the date originally set. 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 careful about the way they pay their monthly payments. In the "FAQs" section of the site says that you have two options to pay your bill: "Standard Payment" and "Express Payment." From there, it becomes dicey:

 

If you select Standard Payment, as per the FAQ "your cash will appear available in about five (5) work days, and you may only pay with your bank account." Five business days can be a challenge. If your due date falls on the 15th day of the month and in a given month the 15th falls on a Saturday. To avoid a late fee, you'd have to make your payment on the 7th of the month (a Friday) to be sure your payment will be received in the "about five (5) business days" timeframe. Unless you paid eight days in advance that is you might have to be "late."

 

If you choose Express Payment When you make an Express Payment, your "funds will become available sooner (usually the next business day)." However, the cost for an Express payment is $9.95.

 

 

The wording Credit One uses is peculiar. We've never seen an agreement on credit cards that has the phrase "funds will be accessible." This kind of language typically applies to bank account deposits, so we're not sure what it refers to in this instance. But we assume it indicates when the payment will be posted onto your credit card.

 

When will your credit replenish?

 

But wait, there's more! Each of the 21 card agreements in"the "real terms and conditions" document include this section:

 

In the event that an amount of payment is less than the amount of principal outstanding for your card account new credit will be made available (subject to the limit of your credit), but only 12 calendar days following our receipt of the payment.

 

This could mean that regardless of when you pay your bill -- on time, late, Standard, Express -- you can't access your total available credit line for two weeks afterward. Imagine your credit limit is $500, and you're maxed out. You've paid off your balance, however, you're unable to make use of your credit card for the next 12 days.

 

In an attempt to clarify, we tried calling the "Application Information" number listed by Credit One however we were unable to reach the initial branch of the phone tree. This is because in order for a person to ask questions regarding applying for a Credit One card, you need to input the 16-digit code of your Credit One card.

 

Consumer complaints

 

Credit One card are offered by Credit One Bank of Las Vegas which is a division of Sherman Financial Group, a private company based in Charleston, South Carolina.

 

In addition to the numerous complaints to government agencies that were discovered by NerdWallet Payment issues are common in complaints regarding Credit One credit cards on the website. Many reviewers claim they attempted to pay their bills on the internet however it was not working. Credit One website was not functioning. They may have made a payments, and it was not credited to the account in time and resulted in a late fee. There are over 1,000 complaints about the business along with its support for customers Consumer Affairs.

 

The complaints about Credit One on the other hand touch on customer service problems with billing and payments. Of the 129 reviews on Yelp at the time of February 2017, 110 gave Credit One one out of five stars.

 

The Better Business Bureau has not provided Credit One a rating. Of the 112 reviews that were posted as of February 2017 , on the site from the Southern Nevada BBB, three were labeled as positive (although some reviews was sharply negative), three as neutral , and the remainder as negative. From 783 complaints recorded on the website, 574 were identified as related to billing or collection including payment problems.

 

Credit protection: Expensive

 

 

Another benefit touted in the advertisement by Credit One is its "Credit Protection Program." This is an optional program that will waive the minimum payment due for six months in the event that the primary cardholder "involuntarily" is laid off or disabled. The cost for this benefit is 96 cents per 100 of the balance due. You pay this every month following the time you have enrolled. For instance, if you've got a monthly balance of $500 enrolling in the program costs you $4.80 in that month. If your balance for the following month is $400, you'll be charged $3.84 the following month and on.

 

After you've signed up to the program, there is an initial 30-day period of waiting before you are able to activate the coverage. When you activate the program, your account will be closed and you can't use the card. Additionally, the minimum payment is not charged, but interest will continue to accrue.

 

Also, Credit One has the option of cancelling your account if your account is 60 days overdue, your account is 20% or more over the maximum credit amount, Credit One "no longer is the owner of the account" you've been guilty of fraud or are participating in one the Credit One Bank's debt management programs.

 

Other characteristics: Good

 

 

Since they are cardholders, they get Visa travel accident insurance and car rental collision damage waiver insurance. They also come with Visa zero fraud liability as well as the conditions and terms inform cardholders that they must report unauthorized charges immediately. While federal law limits cardholder liability to $50 in the event of unauthorized charges and the Visa zero-risk liability guarantees that you will not be held responsible for charges that are fraudulent.

 

The cards offer free credit scores, however you can get your credit score for free just about everywhere these days --- . Some credit card issuers provide you with a free credit score even if 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, however you may pay a fee for this option. The fee isn't disclosed on the Terms and Conditions available on the site.

 

Alternatives to better alternatives There are many

 

 

In light of the ambiguous terms and other drawbacks of Credit One cards, you might be wondering why so many people apply for these cards. One answer might be that people think they're applying for a credit card from Capital One. That logo, which is swooshy, from Credit One actually predates CapitalOne's, but confusion remains within the market. Consumers who expressed their displeasure via the Consumer Affairs website mentioned this problem often.

 

The Credit One cards are marketed to those with poor credit scores, however, better alternatives are available for those who have good credit or . Major issuers offer secured credit cards that come with better terms, lower fees and guaranteed grace periods. Secured cards require an upfront security deposit of at least $200-$300. The process of putting that money together may be a problem for some, but bear in mind that you'll get that money back when you close the account or upgrade to a regular , unsecure card. The charges paid to you by Credit One are not refunded.

 

For instance, the pays cash back of 2% up to $1,000 on food and gas each quarter, and 1 percent cash back on all other purchases. In addition, once you've been responsible with your credit card for seven months, Discover may review your card with a view to making it an unsecure card. In addition the annual fee, it's zero dollars .

 

You may also be eligible to get a Capital One card, the . You can get a $200 credit line with a deposit of $49, $99 or 200 and you could make the deposit in installments before activating your account. You could be able to access a larger credit line without putting more money down if you make payments on terms as short as six months. Also, there's no annual charge.

 

If your credit is average or fair then you might be eligible for the . This card is unsecured and offers unlimited 1.5 percent cash back on purchases with a affordable annual cost.

 

When credit is limited consumers are prone to make poor decisions, such as applying for the Credit One credit card without researching their options. If you look around, you'll find better options with conditions and terms that are well-written.

 

 

 

Author bio Ellen Cannon is a former NerdWallet writer covering credit cards. She was a writer also editor with Bloomberg and Time Inc.

 

 

 

 

 

 

 

 

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