CreditOne Bank offers a line of credit cards targeted at subprime consumers who may not be aware they have better options available. But we are here to warn you that, even if you have bad credit, you should beware of credit cards offered by Credit One.
While the Credit CARD Act of 2009 aimed to eliminate unfair credit card practices, it didn't stop everything. The CARD Act capped fees on so-called "fee harvester" credit cards targetting subprime borrowers by limiting fees to 25% of the initial credit limit during the first year.
Unfortunately, the law does not cap fees during the second year and many credit card companies simply restructured their fee schedules. The Credit One Bank cards are an example of this practice.
Here's what you should know before you apply for a Credit One Bank credit card.
Credit One Bank Card Overview
My first warning should have been that Credit One Bank's logo looks suspiciously like that of another credit card issuer ... one that is well known, well respected, and has entertaining ads on TV featuring celebrities and barbarians.
Unfortunately, unlike Capital One, these cards are not very consumer friendly. And, hopefully, no consumers have been mislead to apply for one of their credit cards.
At first glance, it also appears that there are several credit cards to choose from. But all of their cards offer the same terms and benefits. (Of course, your exact terms will depend on your credit history.)
The names used by Credit One for their cards are (and I recommend watching out for all of them, regardless of name):
- Credit One® Platinum Visa® with Free Monthly Credit Score Tracking
- Credit One® Unsecured Visa®
- Credit One® Visa® 1% Cash Back on Gas & Groceries
- Credit One® Unsecured Platinum Visa®
- Credit One® Visa® Credit Line Increase Reviews
- Credit One® Visa® Free Credit Score Tracking
Yes, these cards come with a reward program offering 1% cash back on gas and groceries. And they provides updates to all the major credit bureaus.
And they will accept you even if you have poor or bad credit. In fact, you can qualify with a FICO score under 600.
But there is where the good news ends.
Credit One's cards will hit you with interest charges regardless of whether you pay your bill in full and on time. They will hit you with tons of fees. And they will cost you a lot more money than other credit cards targeted at subprime consumers.
And even the card labeled as offering a "credit line increase review" will charge you a fee for that review!
The truth is there are plenty of subprime credit cards out there that will report to major credit bureaus (to help you build your credit), but will not gouge you on fees the way Credit One Bank does.
So you can read on for all the gory details. Or stop here and know to just stay away from Credit One Bank. And instead you can stick to our Recommended Cards to Build or Rebuild Your Credit.
High interest rate and lots of fees
if you want to see these fees in all their awful detail, just comb through the terms and conditions like we did. We know many consumers don't have time for the fine print. And that is exactly why we are offering this word of warning.
The Credit One Bank card has a variable APR that ranges from 17.90% to 23.90%. If you don't have excellent credit, you can expect your interest rate will be at the higher end of that range. While this is fairly typical with credit cards for consumers with bad credit scores, it's only the start of the problems with this card.
You will also be hit with a wide range of costly fees for just about everything:
- Annual fee of $35 to $75 the first year. After the first year, this fee goes up to $35 to $99 per year. The annual fee may be divided into 12 equal portions that are billed monthly.
- Authored user fee: $19 per year
- Late payment fee: up to $35
- Returned payment fee: up to $35
- Express payment fee: $9.95
- Credit limit increase fee: up to $49
Fee to increase your credit limit
Want to increase your credit limit? Credit One Bank will charge a fee of up to $49 to do it. Credit One Bank charges this fee whenever you request a credit limit increase and it's definitely not worth it.
This fee is so unusual, we had to make a separate section to highlight it.
Sure, they say the fee is a range of $0 to $49. But I wonder just what percentage of consumers get charged the $0 fee to be charged interest from the moment a charge posts, no matter what!
There is no grace period!
Perhaps the most telling problem with the Credit One Bank card is it has absolutely no grace period. This means you will start paying a high interest rate on your purchases the day they post, regardless of whether you pay your statement in full and on time.
Without a grace period, this makes the cost of every dollar of every charge you make to be the equivalent of taking out a short term loan.
It's rare to find a credit card without a grace period, which is the only way to avoid paying finance charges on a balance. Unfortunately, the Credit CARD Act does not require all credit card issuers have grace periods, only that those that do have grace periods offer at least 21 days.
Barely a Rewards Program
While the Credit One Bank card does earn you cash back, note that you will only earn a meager 1% back on groceries and gasoline -- nothing else.
If you have bad credit, it's better to focus on a credit card with minimal fees that will help you establish credit, not a card that pretends to reward you. You would need to spend $10,000 a year on this card on gas and groceries to even make up for the annual fee, not to mention that would be nearly impossible with the low credit limits, lack of a grace period, and the fact that Credit One Bank holds your payments for up to two weeks.
Payments Take a Long Time to Post
With most credit card companies, your available credit limit is released soon after your payment is posted.
But we have seen numerous consumer complaints that Credit One Bank will actually hold your payments for up to 12 days before posting them to your account. Some cardholders report that payments fail to post for unknown reasons, which can be a big problem if you pay your bill online a day or two before your due date.
These delays can end up costing you a lot of money in additional interest charges.
There Are Better Options
Incase I have not been clear, I will say it one final time: Beware Credit One Bank Credit Cards!
Even if you have bad or poor credit, there are better options out there - whether you want an unsecured or secured credit card.
Some of you may want to start out with a secured credit card, which requires a refundable deposit that is usually equal to your new credit limit. At the very least, we recommend an unsecured credit card that has a grace period so you can avoid paying interest if you pay your bill in full.
Regardless, I know that you can find a better credit card that will report to the major credit bureaus and help you build up your credit score - but cost you a lot less in interest charges, fees, and headaches.
Here are the credit cards for building credit that we recommend. I recommend you start there. And avoid Credit One's offerings.