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Credit One Credit Cards: Confusing for Consumers

Credit Cards, Credit Cards for Average or Fair Credit, Credit Cards for Bad Credit
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The best word to describe the credit cards offered by Credit One is confusing.

For one thing, the issuer’s name and logo are remarkably similar to those of well-known issuer Capital One, which has led some consumers to think they were applying for a card from the latter. For another, it’s all but impossible to know exactly what kind of card you’re going to get until you apply. The credit card terms and conditions on the issuer’s application website are “for informational purposes only.” You don’t get to see the real terms until you qualify for a specific card.

Credit One markets credit cards for people with less-than-great credit. It offers three types of cards:

  • The Cash Back Rewards Visa
  • The Platinum Visa for Rebuilding Credit
  • The Official NASCAR Visa

If you’re considering one of these cards, you should be aware of the potential pitfalls — and you should know that better alternatives are available.

In this article

Rewards: Maybe 
Interest rates: They’re OK
Annual fees: Take a guess
Grace period: Who knows? 
Making payments: Confusion reigns
Credit protection: Expensive
Other features: Decent 
Better alternatives: Many

Rewards: Maybe

With the Cash Back Rewards Visa and the Official NASCAR Visa, you can get 1% cash back on “eligible purchases.” The terms and conditions say that “based on your creditworthiness,” you can qualify for one of five cash-back rewards programs. Here are the possibilities:

Cash Back Rewards Visa

  • 1% cash back on gas, groceries, mobile phone service, internet service and cable and satellite TV service
  • 1.1% cash back on dining purchases and 1% back on all other purchases
  • 1% cash back on all eligible purchases

Official NASCAR Visa

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

The bottom line is that you won’t know how you’ll earn cash back until you get your card. Or maybe your credit will be judged not worthy, and you won’t get any rewards. The Platinum Visa for Rebuilding Credit appears to offer no rewards.

Rewards are automatically redeemed as a statement credit each month, so at least that part is fairly straightforward.

Interest rates: They’re OK

The interest rates cited on the “for informational purposes only” disclosure were 15.90% to 24.40% for purchases and 18.15% to 25.40% for cash advances, as of February 2017. If you have bad or limited credit, the interest rates you’ll pay will be on the high side, and these annual percentage rates are in line with those on typical credit cards for bad credit.

Annual fees: Take a guess

Like many features of Credit One cards, the annual fee you’ll pay is a mystery until the issuer qualifies you for a card. Your annual fee the first year will be “between $0 and $75.” For the second year and beyond, that range expands to between $0 and $99. After the first year, your annual fee might be billed in monthly installments. Or it might not.

Some Credit One credit card agreements — “real” terms and conditions that will ultimately apply to cardholders — are included in this document. It outlines 26 different combinations of APRs, annual fees and other card features. Again, the one that applies to you will be disclosed only after you qualify for a card. It includes eight different annual fee structures: $0 first year/$0 after that; $0/$45 (billed annually); $35/$35 (billed annually); $35/$75 (billed monthly); $45/$45 (billed annually); $60/$60 (billed monthly); $75/$99 (billed annually); and $75/$99 (billed monthly).

Here are some of the other fees you might pay (we say “might” because the “for informational purposes only” terms may be different from your actual terms):

  • Authorized user: $19 per year; authorized user must be at least 15 years old
  • Foreign transaction fee: 3%
  • Cash advance: $5 or 8% of each cash advance, whichever is greater, or $10 or 3% of each cash advance, whichever is greater
  • Late payment fee: up to $37
  • Returned payment fee: up to $35
  • Credit limit increase fee: $0 to $49
  • Duplicate monthly statement fee: $10
  • Sales receipt request: $6
  • Replacement card: $25
  • Balance transfer fee: No balance transfers allowed

Grace period: Who knows?

On most credit cards, if you pay your balance in full each month, you automatically get a grace period — that is, you won’t be charged any interest on purchases until your next payment due date. Pay in full each month, then, and you’ll never be charged any interest.

With the Credit One cards, however, you can’t tell upfront whether you get a grace period. In the “for informational purposes only” terms, there’s a section on “paying interest.” It begins, “If your Account has a Grace Period …” That’s a big “if.” It goes on to say that if your account has no grace period, you will pay interest on every purchase from the time it is posted to your account. As with most key details about Credit One cards, you won’t know whether you get a grace period until you apply. Of the 26 card agreements spelled out by Credit One, about half have a grace period.

Making payments: Confusion reigns

As with all credit cards, the balance on your Credit One card is made up of your purchases, cash advances (if any), interest and any fees that are applied. The minimum payment on Credit One cards is 5% of the balance. For most credit cards, the minimum payment is 1% to 3% of the balance.

After one billing period, Credit One cardholders may call Customer Service and choose their own due date as long as it’s within six days before or after the original date. Cardholders may choose a different due date once every six months.

WHEN WILL YOUR PAYMENT BE CREDITED?

It appears that Credit One cardholders have to be extra careful about when they make their monthly payments. The “FAQs” section of the website says you have two choices for paying your bill: “Standard Payment” and “Express Payment.” From there, it gets dicey:

  • If you choose Standard Payment, according to the FAQ, “your funds will become available in about five (5) business days and you may only pay with your Bank Account.” Five business days is tricky. Say your due date is the 15th 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 that month (a Friday) to be sure your payment would be posted in the “about five (5) business days” window. Unless you paid eight days early, in other words, you could be “late.”
  • If you choose Express Payment, your “funds will become available sooner (usually the next business day).” However, the fee for an Express Payment is $9.95.

Even the language Credit One uses is peculiar. We’ve never seen a credit card agreement with wording about when “funds will become available.” That kind of language usually applies to bank account deposits, so we can’t be sure what it means in this context. But we assume it indicates when the payment will post to your account.

When does your available credit refresh?

But wait, there’s more: Each of the 26 card agreements in the “real terms and conditions” document include this section:

To the extent that a payment reduces the principal amount outstanding on your Card Account, new credit will be available (subject to your credit limit), but only after 12 calendar days after our receipt of the payment.

This seems to indicate that regardless of when you make your payment — on time, late, Standard, Express — you can’t access your total available credit line for nearly two weeks afterward. Say your credit line is $500, and you’re maxed out. You pay off your balance — but you still can’t use your card for 12 more days.

To get clarification, we called the “Application Information” number listed by Credit One, but we couldn’t get past the first branch of the phone tree. That’s because to ask a question about applying for a Credit One card, you have to enter the 16-digit number of your Credit One card.

CONSUMER COMPLAINTS

Credit One cards are issued by Credit One Bank of Las Vegas, which is a subsidiary of Sherman Financial Group, a private company based in Charleston, South Carolina. Payment issues are common in complaints about Credit One credit cards on the Consumer Affairs website. Many reviewers say they tried to pay their bill online, but the Credit One website was not working. Or they made a payment, but it wasn’t credited to the account in a timely fashion and triggered a late fee. There are more than 1,000 complaints about the company and its customer service.

Complaints about Credit One on Yelp also touch on customer service, billing and payment issues. Of 129 reviews on Yelp as of February 2017, 110 gave Credit One one out of five stars.

The Better Business Bureau has not given Credit One a rating. Of 112 reviews as of February 2017 on the website of the southern Nevada BBB, three were labeled as positive (although the tone of one was sharply negative), three as neutral and the rest as negative. Of 783 complaints logged on the site, 574 were identified as billing or collection issues, which includes payment problems.

Credit protection: Expensive

Another benefit touted by Credit One is its “Credit Protection Program.” This is an optional program that waives the minimum payment due for six months if the primary cardholder “involuntarily” becomes unemployed or disabled. The cost of this benefit is 96 cents for every $100 of your balance due. You pay this every month after you enroll. For example, if you have a balance of $500 one month, being in the program will cost you $4.80 that month; if your balance the next month is $400, you’ll be charged $3.84 that month, and so on.

Once you enroll in the program, there is a 30-day waiting period before you’re eligible to activate its coverage. When you activate, your account is closed, and you cannot use the card; the minimum payment is waived, but interest will continue to accrue.

Also, Credit One has the right to cancel your enrollment if your account is 60 days past due, your account is 20% or more over the credit limit, Credit One “no longer owns the account,” you have committed fraud, or you’re in one of Credit One Bank’s debt management programs.

Other features: Decent

Because these are Visa cards, cardholders get the Visa travel accident coverage and car rental collision damage waiver insurance. The cards also have Visa zero fraud liability, and the terms and conditions warn cardholders that they must report unauthorized charges immediately. While federal law limits cardholder liability to $50 for unauthorized charges, the Visa zero fraud liability guarantees you won’t be liable for fraudulent charges.

The cards offer free credit scores, but you can get your credit score for free just about everywhere these days — including on NerdWallet. Some credit card issuers will give you a free score even if you’re not a cardholder.

You can choose from an array of designs (23 for the rewards card, 20 for the rebuilding-credit card) to “personalize” your credit card, but you may pay a fee for that option. That fee is not disclosed in the terms and conditions available on the website.

Better alternatives: Many

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Credit One’s name and logo are similar enough to those of Capital One to confuse some consumers.

Considering the opaque terms and other drawbacks of Credit One cards, you might wonder why so many people apply for them. One answer might be that consumers think they’re applying for a credit card from Capital One. Consumers who complained on the Consumer Affairs website mentioned this problem frequently.

Credit One cards are marketed to people with less-than-good credit, but much better alternatives are available. Major issuers offer secured credit cards with better terms, lower fees and guaranteed grace periods. Secured cards require an upfront security deposit, but you get that money back when you close the account or upgrade to a regular unsecured card.

For instance, the Discover it® Secured Card - No Annual Fee pays 2% cash back up to $1,000 in spending on gas and restaurants per quarter and 1% cash back on all other purchases. Plus, after you have managed your card responsibly for eight months, Discover may review your card with an eye toward upgrading you to an unsecured card. On top of that, its annual fee is $0.

You might also qualify for a real Capital One card, the Capital One® Secured Mastercard®. You could get a $200 credit line with a deposit of as little as $49, depending on your credit. When you make your first five payments on time, you may get access to a higher credit line without putting more money down. And the annual fee is $0.

If your credit is fair or average, you could qualify for the Capital One® QuicksilverOne® Cash Rewards Credit Card. This unsecured card offers an unlimited 1.5% cash back on all purchases for an annual fee of $0.

When credit is limited, consumers may make bad decisions, like applying for a Credit One credit card. Look around, and you can find better choices — with terms and conditions that are clearly spelled out.

Ellen Cannon is a staff writer at NerdWallet, a personal finance website. Email: ecannon@nerdwallet.com. Twitter: @ellencannon.