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Credit One credit cards: Confusion for Consumers

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Credit One Credit Cards: Confusion for consumers

Have bad credit and confused with Credit One credit cards? The problem isn’t with you.

by Ellen Cannon Ellen Cannon is an ex-credit card writer at NerdWallet. She was a writer for personal finance for more than 20 years at Bloomberg along with Bankrate.com.

Nov 20, 2020

Editor: Paul Soucy Lead Assigning Editor Credit scoring, credit cards, personal finance Paul Soucy leads the credit cards content team at NerdWallet. He was an editor with The Des Moines Register, USA Today and Meredith/Better Homes and Gardens for more than 20 years, after which he established his own successful freelance editing and writing practice. The editor of the USA Today Weekly International Edition and received the highest award of the year from ACES: The Society for Editing. He earned a bachelor’s in journalism as well as a Master of Business Administration.

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Credit One has significantly overhauled its credit card offerings as well as its policies since this article was published. We’re working on an update.

The best word for describing the cards provided from Credit One is confusing .

When you begin the process of applying and you’re not sure what kind of card you’re eventually going to get which includes crucial details like rates, fees and rewards, or even if you’re granted an .

When you send in an order in time but you’re not sure if it will be added to your account quickly enough so that you don’t pay a late charge. The issuer often takes up to a week to process your payment however, many cardholders experience problems paying online, as per the reports from Credit One submitted for the Consumer Financial Protection Bureau and state regulators.

The credit card you see on the site of the issuer- a critical source of information regarding any credit card is a generic statement intended “for purposes of information only” for Credit One. You don’t get to see the exact terms until you qualify for a specific card.

The logo and name of the issuer are like those of the well-known issues Capital One, which has made some people believe they were applying for a card issued by the latter.

Credit One markets credit cards for people with less-than-great credit. The issuer says that in order to make cards available to as many of these subprime borrowers as possible, it has to do things in a different way than what you see with cards designed for consumers with better credit. Fair enough, but the confusion is real, so beware and be cautious when you apply 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: It’s all about prequal

Some credit card issuers will allow you to . Prequalification is when you submit some basic information that the issuer then runs an instant check to determine whether you’re likely accepted for a credit card. Prequalification isn’t a factor in your credit scores. Only an actual credit application results in a “hard inquiry” which can take the points from your credit score. However, prequalifying does not assure you that you’ll ultimately be granted credit. It’s something like a “soft yes.”

Prequalification is optional with most issuers, but it’s a crucial element to your Credit One application process. It is necessary to prequalify to understand 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 and if so, you will be subject to a hard inquiry. The review of your application is more thorough than the “prequal” exam, which means you could still be rejected or approved for different card terms that you did not see following prequalification.

>> MORE:

What is the reason they behave in this manner?

Credit One states that this prequalification process protects subprime consumers, who can least afford to lose points off their credit scores.

As an example, suppose that an issuer provides three cards with annual fees in the range of $99 $45 or $0. A person with bad credit might qualify for the $99 card but not for the other twoHowever, they’d probably opt for the card with a zero fee first, followed by the $45 card, and then the $99 card as a last option. Their credit score would suffer the impact of three applications instead of one.

Credit One is, in contrast, might offer one card with the possibility of a dozen combinations of rewards, fees and rates. You apply once and the company then approves you for terms based the creditworthiness of your applicant. There’s a good reason but it also means there’s an additional hurdle to leap through. You don’t know what you’re getting (or likely to get) until you’ve begun the process of applying in which case you’re more likely to bail out.

Rewards: Wait and see

These terms and conditions stipulate that based upon your creditworthiness you can be eligible for any of the six cash-back rewards 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

1.1% cash back on food, gas and mobile phone service. internet service, and satellite and cable TV.

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

1.1% cash back on all eligible purchases.

5% cash back the first $5,000 a year in combined spending on gasoline, groceries mobile phone service, internet service, and satellite and cable TV services as well as 1percent cash back rewards on any other purchase.

NASCAR(r) Credit Card from Credit One Bank(r)

1% cash back on automotive and gas purchases and double cash back on NASCAR.com purchases.

1% cash back on all purchases and double money back when you make NASCAR.com purchases.

The bottom line is that you don’t know exactly the method by which you’ll earn cash back until you get the card.

Rewards are automatically redeemed as a statement credit each month, so this part is pretty straightforward.

Rates of interest: They’re okay

The interest rates cited in the “for purposes of information only” disclosure ranged from 19.74% and 25.74% as of August 2018. If you have bad or low credit, the rates you pay for any credit card or loan will be high. Rates at Credit One’s are on par with typical credit cards designed for people with bad credit.

Annual fees: Take your guess

As with other key characteristics of Credit One cards, the annual fee you’ll pay is not known until the issuer has you qualified for a credit card. The initial year is “between $0 to $75.” For the next year and beyond that range expands to between $0 and $99. Following the initial year, your annual cost could be charged by monthly instalments. However, it may not be.

Some Credit One credit card agreements -which are “real” agreements and terms that will ultimately apply to cardholders are included in . As of August 2019, the agreement outlined 21 different combinations of APRs annual fees and other features. Also, the one that you are eligible for will be disclosed only after you are approved for a credit card.

Nerdy Tip

For certain Credit One cardholders, the annual fee is paid in monthly installments, instead of all at one time. That means they are required to pay the bill each month even when they haven’t been using the card. This, in turn, increases the chances of missing payments or making late payments due to the issues many cardholders report with having their payment credited in a timely manner as discussed below.

Here are some of the additional fees you could be charged (we use the word “might” because the “for solely informational purposes” terms may be different from the terms of the credit card you’re ultimately accepted 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 money advance, which is more or $10 or 3percent of each money advance, or whichever higher.

Late payment fee: up to $37

Returned payment fees Up to $35

Increased credit limit fee from $0 to $49

Fee for duplicate monthly statements 10 dollars

Request for receipts of sales: $6

Card replacement: $25

Transfer fee for balance transfers 5 percent or 8% from the total balance transfer, which ever is greater (if the card permits transfers at all)

Grace period: Who knows?

With most credit cards when you pay the total balance each month, you automatically receive a — which means that you’ll not be charged interest on purchases until your next due date for payments. Pay in full each month, then, and you won’t be charged interest.

When you use the Credit One cards, however, you can’t tell upfront whether you get a grace period. In the “for informational only” terms, there’s a section on “paying the interest.” It starts with “If your account has an Grace Period …” That’s a big “if.” Then it goes on to explain that if your account has no grace period, you’ll have to pay interest on every purchase from the time it is posted into your bank account. Similar to the majority of important details concerning Credit One cards, you won’t know whether you get a grace period until you make an application. Of the 31 agreements for credit cards spelled out by Credit One as of August 2018, about half included a grace period.

Making payments: Confusion reigns

A NerdWallet investigation released in October 2018 found hundreds of complaints against Credit One that, because of an unintended loophole in federal law, had not been made public to consumers. Payment issues come up repeatedly in those 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 instances, customers could not pay on credit card on the Credit One website and were forced pay by phone or mail, incurring additional fees.

Credit One declined to comment on the findings of the investigation but its stated policy on processing payments seem to confirm the claims. Most credit card issuers will transfer a payment to the cardholder’s account instantly. Credit One says it will keep your money for a few days until you deposit the equivalent of $10 to process it within a day.

When will your money be credits?

Like any credit card, the balance on credit cards is based on the balance of your Credit One card is made from your cash advances, purchases (if they are available), interest and any fees that are applied. The minimum payment for Credit One cards is 5 percent of the amount. For the majority of credit cards, the minimum payment is 1% to 3percent on the amount.

After one billing period, Credit One cardholders may call Customer Service and choose their preferred due date, as in the six days before or after 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 careful about when they make their monthly payments. According to the “FAQs” section on the site states that you have two options for paying the bill “Standard Pay” as well as “Express Pay.” From there, things get difficult:

If you choose Standard Payment, in accordance with the FAQ “your cash will appear available in about 5 (5) work days. However, you will only be able to pay using your bank account.” Five business days is a long time. Let’s say that your due date falls on the 15th of the month, and for a particular month, this date falls on a Saturday. To avoid a late fee it is recommended to pay your payment by the 7th of the month (a Friday) in order to ensure that your payment would be posted in the “about five (5) business days” window. Unless you paid eight days early that is it could be “late.”

If you opt for Express Payment If you choose Express Payment, your “funds will be available earlier (usually the next business day).” However, the cost for an Express payment is $9.95.

Even the wording Credit One uses is peculiar. We’ve never seen an agreement on credit cards that has specific language about when “funds will be accessible.” That kind of language usually is used for bank deposits, so we can’t be certain what it means in this case. However, we believe it will indicate that the money will be posted to your account.

When does your credit available replenish?

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 the payment decreases the amount of principal outstanding on your Card Account, a new credit will be available (subject to your credit limit) however, only 12 calendar days from we receive the money.

This could mean that regardless of when you make your payment (on time in the past, late, Standard or Express — you can’t access your total available credit line for two weeks following your payment. Let’s say your credit line is $500 and you’re maxed out. You’re able to pay off the balance — however, you’re unable to make use of your credit card for the next 12 days.

To try to get clarification, we attempted to call the “Application For Information” number listed by Credit One, but we couldn’t make it past the first branch of the phone tree. That’s because for a person to inquire about applying for the Credit One card, you need to input the 16-digit number for your Credit One card.

Consumer complaints

Credit One card are offered by Credit One Bank of Las Vegas which is a subsidiary of 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 payments problems are frequent when it comes to complaints about Credit One credit cards on the website. A lot of reviewers have reported that they tried to pay the bill on the internet but the Credit One website was not working. If they did make a pay-pal, however it wasn’t debited from the account on time and resulted in a late charge. There are over 1,000 complaints about the business as well as its service to customers on Consumer Affairs.

Concerns regarding Credit One on the other hand touch the Customer service and billing and payments issues. From 129 reviews posted on Yelp at the time of February 2017, 110 gave Credit One one out five stars.

The Better Business Bureau has not awarded Credit One a rating. From 112 reviews posted in Feb. 2017 posted on the website from the Southern Nevada BBB, three were classified positively (although there was one review that review was clearly negative), three as neutral and the rest as negative. Of the 783 complaints that were reported on the website, 574 were identified as related to billing or collection, which includes payment problems.

Credit protection: Expensive

Another benefit touted in the advertisement by Credit One is its “Credit Protection Program.” This is an option that allows you to waive the minimum payment due for six months in the event that the cardholder “involuntarily” goes out of work or becomes disabled. The cost for this benefit is 96 cents for every hundred dollars of balance to be paid. This is due each month 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 will cost you $4.80 in that month. If your balance for the following month is $400, you’ll be charged $3.84 that month and on.

After you’ve signed up to the program, you’ll have to go through an initial 30-day period of waiting before you are able to start the 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 not charged, but interest will continue to accrue.

Also, Credit One has the right to cancel your enrollment if your account is more than 60 days late, your account is more than 20% over the maximum credit amount, Credit One “no longer is the owner of the account” you have been guilty of fraud or you’re participating in the one or more or more of Credit One Bank’s debt management programs.

Other characteristics: Good

Since they are , cardholders get the Visa travel accident insurance and car rental collision damage waiver insurance. Additionally, the cards come with Visa zero fraud liability and the terms and conditions inform cardholders that they must notify any unauthorized charges within a few hours. While federal law limits cardholder liability to $50 for unauthorized charges, Visa zero-risk liability guarantees that you are not responsible for charges that are fraudulent.

Credit cards are free scores, however you can get your credit score for free nearly everywhere these days -and . Certain credit card issuers give you a free score even in the absence of a card.

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 may pay a fee to use this option. The fee isn’t disclosed in the terms and conditions that are available on the website.

Alternatives to better alternatives: Many

When you consider the unclear terms and other drawbacks of Credit One cards, you may wonder why people are so eager to apply for the cards. One possibility is that people think they’re applying for a credit line from Capital One. The logo of Credit One’s swooshy actually predates CapitalOne’s, however confusion remains in the marketplace. Customers who have expressed their displeasure via the Consumer Affairs website mentioned this issue frequently.

Credit One cards are targeted to people with less-than-good credit, but better alternatives are available for people who have good credit or . Major issuers offer secured credit cards that come with better terms, lower fees and assured grace periods. Secured cards require an initial security deposit of at least $200 to $300. Finding that cash can be a challenge to some people, however bear in mind that you will get this money back once you close the account or upgrade to a regular unsecured card. The charges paid from Credit One are not refunded.

For example, the rewards program offers cash back of 2% up to $1,000 in spending on food and gas per quarter and 1% cash back on other purchases. Additionally, after having maintained your credit card in a responsible manner over the course of seven consecutive months Discover could review it with a view to making it an unsecure card. In addition the annual cost is $0 .

You might also qualify for a real Capital One card, the . You could get a $200 credit line by making a deposit of either $49, $99, or $200 and make payments on the deposit before opening your account. You may be able to access a larger credit line without putting more money down , if you pay in terms as short as six months. Also, there’s no annual charge.

If your credit is good or even average, then you may qualify for the . This unsecured card offers an unlimited 1.5% cash back on purchases with a affordable annual cost.

When credit isn’t available, consumers may make bad choices, such as applying for credit with a Credit One credit card without conducting their research. If you look around, you can find better choices that have terms and conditions that are well-written.

About the author: Ellen Cannon is a former NerdWallet writer who writes about credit cards. She was a writer and editor at Bloomberg and Time Inc.

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