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(image: https://freestocks.org/fs/wp-content/uploads/2016/06/childrens_day_4-1024x683.jpg)Credit One credit cards: Confusion for consumers
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Credit One Cards from Credit One: 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 for NerdWallet. She wrote about personal finance issues for over 20 years at Bloomberg as well as Bankrate.com.
Updated November 20 2020
Edited by Paul Soucy Lead Assigning Editor Credit scoring, credit cards, personal financial matters 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 practice with a focus on personal and business finances. He was editor of the USA Today Weekly International Edition for six years and received the most prestigious distinction by 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 fiancee, his two sons and an animal named Sam.
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Credit One has significantly overhauled its credit card offerings and its policies since the article was written. We're working on an update.
The most appropriate word to describe the credit cards provided through Credit One is confusing .
When you start the process of applying it's difficult to know what type of credit card you'll get -- including important details like fees, rates, rewards, even whether you get an .
If you don't make the payment at the time you want however, you aren't sure whether it will be credited to your account soon enough to avoid paying a late fee. The company typically takes about a week to process payments and a lot of cardholders have issues when they pay online, according to about the Credit One made an inquiry to Consumer Financial Protection Bureau and the state regulators.
The credit card on the site of the issuer- a critical source of information about any card -is a generic statement that is intended "for solely informational purposes" at Credit One. It isn't possible to read your actual terms until you are able to qualify for a specific card.
The name and logo of the issuer are identical to the logo of the more well-known card issuer Capital One, which has led some consumers to think they're applying for a card from Capital One.
Credit One markets credit cards for people with less-than-great credit. In its defense, the issuer claims that in order to offer credit cards to as many subprime borrowers as possible, it has to do things differently from what you will find on cards designed for consumers with better credit. It's fair enough, but the confusion is real so be aware and cautious when you apply 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 The key is prequalification
Many credit card issuers allow the possibility of . With prequalification, you provide the basic details, and the issuer runs a quick check to see whether you're likely to get accepted for a credit card. Prequalification doesn't affect your credit score. Only an actual credit application will trigger the "hard inquiry" that can reduce your score by a few points. However, prequalifying does not assure you that you'll ultimately be granted credit. It's something like a "soft yes."
Prequalification is not required by most issuers, however it's an essential element to the Credit One application process. You must prequalify in order to learn the exact charges, rates and reward structure of the card you'll be applying for. When you've read the conditions, you can decide if you want to apply and if so, you will be subject to a hard inquiry. The application review is more extensive than an "prequal" review, so it is possible that you will be rejected or granted a different credit card that you did not see following prequalification.
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Why are they doing it in this manner?
Credit One says this prequalification process is designed to protect consumers who are subprime, and who are least able to lose points off their credit scores.
In this case, let's say that an issuer provides three cards that have annual fees of $99, $45 or $0. Someone having bad credit might qualify for the $99 card, but not the other twohowever, they'd likely opt for the card with a zero fee first, followed by the $45 card and finally the $99 card for a final resort. Their credit score will be affected by three applications, rather than just one.
Credit One, by contrast it could provide a single credit card that has several possible combinations of rewards charges, rates and fees. The application process is one-time and the issuer then accepts the terms you want to use dependent upon your creditworthiness. This is an advantage however, there's an extra hoop to jump through. You don't know what you're getting (or likely to get) until you've begun the application process in which case you may be less likely to fail.
Rewards: Wait to see
The terms and conditions state that, based upon your creditworthiness you can qualify 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
Cash back of 1% on food, gas and mobile phone service. internet service, cable and satellite TV.
Cashback of 1% on fuel, groceries, dining purchases and mobile phone service internet service and cable and satellite TV service.
Cash back of 1% on eligible purchases.
5% cash back the first $5,000 for combined gas, groceries and mobile phone service. internet service, and satellite and cable TV services and 1% cash back rewards on any other purchase.
NASCAR(r) Credit Card from Credit One Bank(r)
1% cash back on gas and automotive purchases, and double the cashback on NASCAR.com purchases.
Cash back 1% on all purchases and double the cashback on NASCAR.com purchases.
The bottom line is that you won't know how you'll earn cash back until you've received your credit card.
Rewards are automatically converted into a statement credit each month, which means this part is pretty straightforward.
Rates of interest: They're okay
The rates for interest on the "for informational purposes only" disclosure ranged from 19.74% to 25.74 percent as of August 2018. If you have bad or limited credit, the rates you pay for any card and loan will be on the high side. Rates at Credit One's are on par with the rates on standard credit cards designed for bad credit.
Annual fees: Make an educated guess
Like other characteristics of Credit One cards, the annual fee is not known until the issuer is able to qualify you for a card. The annual cost for the first year will be "between $0 to $75." In the next year and beyond this range will increase to $0 to $99. In the following year after the beginning, your annual cost could be charged in monthly installments. It could also be billed in one lump sum.
Some Credit One credit card agreements -which are "real" agreements and terms that ultimately apply to cardholders -- are included in . As of August 2019, the agreement outlined 21 various combinations of APRs, annual fees, and other card features. Again, the one that you are eligible for will be made public only once you qualify 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 have a bill to pay each month even when they're not using the card. This in turn increases the chances of missing a payment or paying late due to the issues that many cardholders have with getting their payments received in a timely manner as discussed below.
Here are some of the other charges you may have to pay (we use the word "might" due to the fact that the "for solely informational purposes" terms could be different from the terms of the card you're ultimately approved for):
Authorized user: $19 per year; authorized user must be 15 years old
Foreign transaction fee: 3% (minimum $1)
Cash advance: $5 (or 8%) of every cash advance, whichever is greater or $10 or 3% of every advances, which is greater
Late payment fee: up $37
Returned payment fee as high as $35
Fee for increasing credit limit From Zero to $49
Fee for duplicate monthly statements The fee is $10.
Request for receipts of sales: $6
Replacement card: $25
Transfer fee for balance transfers of $5 or 8% of the balance transferred which ever is greater (if the card allows transfers in any way)
Grace period: Who is sure?
For most credit cards, when you pay off your balance in full each month, you automatically get a -- that is you'll not be charged any interest on purchases until your next pay-day. Complete your monthly payments in full, then, and you won't be charged interest.
When you use the Credit One cards, however you don't know upfront whether you get a grace period. In the "for informational purposes only" terms, there's a section on "paying an interest." It begins "If your Account is subject to a Grace Period ..." That's an enormous "if." It goes on to say that if your account has no grace period, you'll be charged interest on each purchase up until the point it's credited onto your credit card. Like most important information concerning 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, roughly half of them were grace periods.
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 had not been made apparent to consumers. Payment issues come up repeatedly in these complaints, as well as in posts posted in other forums.
People report that they made a payment before the due date, but then having Credit One fail to process the payment until it was "late." In other cases, consumers weren't able to pay via credit card on the Credit One website and had 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 appear to verify the complaints. The majority of credit card issuers apply a payment to a cardholder's account right away. Credit One says it will keep your money for a few days unless you chip in a nearly $10 fee to have it processed within the next day.
When will your money be credited?
As with 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 any) plus interest, and any fees that are added. The minimum amount to pay for Credit One cards is 5% of the balance. For the majority of 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 so in the six days before or after the original date. Cardholders may choose a different due date once every six months.
It seems it is the case that Credit One cardholders have to be extra cautious how they pay each month's payments. The "FAQs" section on the site states that you have two options to pay your bill: "Standard Payment" and "Express Payment." From there, it becomes dicey:
If you choose Standard Payment, according to the FAQ "your cash will appear available in about five (5) working days and you will only be able to pay using your Bank Account." Five business days can be a challenge. Let's say your due date falls on the 15th of the month, and in a given month this date falls on a Saturday. To avoid a late fee you'll need to make your payment by the 7th day of the month (a Friday) to ensure that your payment will be received in the "about five (5) business days" window. If you haven't paid for eight days in advance or, more precisely, you could be "late."
If you choose Express Payment, your "funds will be available earlier (usually within the next business day)." However, the fee for Express payment is $9.95.
The language Credit One uses is peculiar. We've not seen an agreement for credit cards with specific language about when "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 case. But we assume it indicates when the payment will post onto your credit card.
When does your available credit renew?
But wait! There's more! Every one of the 21 card agreements that are part of the "real agreement on terms and conditions" document contain this paragraph:
In the event that a payment reduces the principal amount outstanding in your Credit Card account, credit will be made available (subject to the credit limit), but only after 12 calendar days after our receipt of the payment.
This could mean that regardless of when you make your payment (on time or late, Standard, Express -- you can't get access to your credit line for two weeks afterward. Say your credit line is $500, and you're maxed out. You've paid off your balance -- but you still can't use your card for another 12 days.
To try to get clarification, we attempted to call to the "Application For Information" number that is provided by Credit One, but we couldn't get past the first branch of the telephone tree. This is because in order to inquire about applying for a Credit One card, you have to enter the 16-digit number for your Credit One card.
Consumer complaints
Credit One credit cards can be purchased from Credit One Bank of Las Vegas, which is a division to Sherman Financial Group, a private company with its headquarters in Charleston, South Carolina.
In addition to the numerous complaints to government agencies that were discovered by NerdWallet Payment issues are common when it comes to complaints about Credit One credit cards on the website. Many reviewers say they tried to pay their bills online however they found that the Credit One website was not working. If they did make a payment, but it was not debited from the account in time and triggered a late fee. There are more than 1000 complaints regarding the company as well as its service to customers on Consumer Affairs.
Concerns regarding Credit One are also centered with customer service, billing and payment issues. From 129 reviews posted on Yelp as of Feb. 2017, 110 gave Credit One one out of five stars.
The Better Business Bureau has not given Credit One a rating. Of the 112 reviews that were posted as of February 2017 , on the site of the southern Nevada BBB Three were classified as positive (although there was one review that review was clearly negative) Three were classified as neutral and the rest as negative. From 783 complaints recorded on the website 574 complaints were classified as billing or collection issues 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 waives the minimum due payment for six months if the primary card holder "involuntarily" becomes unemployed or disabled. The cost of this benefit is 96 cents per 100 of the balance to be paid. The cost is paid monthly after you enroll. For instance, if you have a balance of $500 one month, being in the program is going to cost $4.80 in that month. If your balance in the next month is $400 then 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 a 30-day waiting period before you are able to activate its coverage. Once you've activated the program, your account will be closed and you can't make use of the card. The minimum payment is waived, but interest will continue to accrue.
Also, Credit One has the option of cancelling your account if your account is 60 days late, your account is at least 20% over the limits of credit, Credit One "no longer is the owner of the account" you've made a fraudous transaction, or are in one of Credit One Bank's debt management programs.
Other features: Decent
Because these are cardholders, they get Visa travel accident insurance and collision damage waiver for car rentals insurance. The cards also have Visa zero fraud liability, as well as the conditions and terms inform cardholders to report unauthorized charges immediately. While federal law restricts liability of cardholders to $50 for charges that are not authorized, Visa zero fraud liability is a guarantee that Visa zero-risk liability guarantees that you are not liable for fraudulent charges.
Credit cards are free scores, but you can obtain the credit score you want for no cost just about everywhere -and . Some credit card issuers will give you a free score even when you're not a cardholder.
You can choose from a variety of designs (23 for the rewards card, 20 for the rebuilding credit card) to "personalize" your credit card, however you may pay a fee to use this option. That fee is not disclosed within the conditions and terms that are available on the website.
Alternatives: Many
When you consider the unclear terms and other disadvantages of Credit One cards, you might be wondering why people are so eager to apply for these cards. One possible reason is that many people believe that they're applying to a credit card from Capital One. That logo, which is swooshy, from Credit One actually predates CapitalOne's, however, confusion persists in the marketplace. Consumers who complain via the Consumer Affairs website mentioned this issue frequently.
credit One cards are marketed to those with poor credit, but better alternatives are available to those who have . Major issuers offer secured credit cards with higher rates, better terms, and a grace period that is guaranteed. Secured cards require an upfront security deposit of $200-$300. Getting that money together can be a problem for some, but bear in mind that you will get the money back when you shut down the account or switch to a regular , unsecure card. The fees that are charged by Credit One are not refunded.
For example, the card offers cashback of 2%, of up to $1000 on gas and restaurants every quarter. It also gives 1% cash back on any other purchase. Plus, after you have been responsible with your credit card over the course of seven consecutive months Discover could review it with an eye toward changing it to an unsecured card. In addition its annual cost, the card's annual fee is $0 .
You may also be eligible for a genuine Capital One card, the . You could get a $200 credit line by making a deposit of either $49, $99, or $200, and you can make payments on the deposit before opening your account. You can get access to a higher credit line without having to put additional money down if pay in the timeframe of six months. Also, there's no annual charge.
If your credit is fair or average and you have a good credit score, you may be eligible for the . This unsecured card offers an unlimited 1.5 percent cash back on purchases, with a affordable annual cost.
When credit isn't available consumers are prone to make poor choices, such as applying for the Credit One credit card without doing their homework. Look around, and you can find better choices -- with conditions and terms that are clearly spelled out.
Author bio Ellen Cannon is a former NerdWallet writer who writes about credit cards. She was a journalist as well as an editor for Bloomberg as well as Time Inc.
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