Have bad credit? Well don’t make a bad choice with the Discover Matrix card.

This is one of the most expensive credit cards on the market. But before I get to the fees, let me first explain something about the issuer…

This card is NOT issued by Discover. It’s issued by a company called Continental Finance. They haven’t been around very long (since 2005) and this is all they do; issue fee-laden credit cards aimed at people who have a poor credit history.

The only reason it’s called a Discover card is because Continental Finance uses them as their processing network (transactions are processed over Discover’s network). Aside from that, Discover has nothing to do with this company.

It’s important to point this out, because Discover’s customer service has an excellent reputation. But since they don’t issue or manage this card, you will only be dealing with Continental Finance.

Fees… how many are too many?

The funny thing is their advertising touts “no application fees” in a big bold font. Sure, that’s a true statement, but is it really forthright for them to say that? Because when you click on the Terms and Conditions, in the fine print you will see all the other fees they charge…

So right off the bat you are a charged a whopping $75 annual fee. Then when the 2nd year rolls around, you will also start being charged $144 annually for a “monthly maintenance fee.” That means for the 2nd year and beyond, you’re paying $219 annually ($75 + $144).

The motive for structuring the fees like this is obvious. Because the Federal Reserve started a rule whereas the first year fees can’t exceed 25% of the credit limit. $75 is exactly 25% of the $300 minimum. But then when year two comes, the fees skyrocket.

If you think that’s bad, it gets worse…

• 29.99% interest rate. That’s not just high, it’s really high.
• Fee for increasing your credit limit. The minimum limit on the Matrix credit card is a pitiful $300. Technically speaking it may be possible you get a higher limit than that to start out with, but most of the reviews I’ve seen say otherwise. Whatever the case, if you want to increase your credit limit, you have to pay a $30 fee for each $100 of additional credit.
• $30 additional card fee. Want to order another card for someone else on your account? That will be another thirty bucks.
• $4.95 per month paper statement fee. Now this one is real rotten of them to slip in there, because I don’t see it prominently listed on the application. I had to dig into the fine print to find out that Continental Finance charges a $4.95 monthly fee on their Matrix Discover card for paper statements. The only way to avoid this is to enroll in electronic statements instead.
• Penalty fees. Both the late payment and returned payment fees are up to $35 a pop.
• Foreign transaction fees. These are 3% and in their defense, this isn’t unusual.
• Cash advance fees. 5% of the amount or $5, whichever is greater. Please note that interest begins accruing immediately on cash advances (there is no grace period).
• Payment holds policy. When it comes to credit cards for bad credit, one of the biggest complaints I hear is that sometimes, the bank will hold your payment for a few days before processing them. This might result in additional interest charges or even a late fee, depending on how long they hold it. The policy that Continental Finance has on payment holds doesn’t sound to be a fair one, in my personal opinion:

If you already have this card…

…you should cancel ASAP. If you recently applied for it, you might be able to get your annual fee refunded. Here’s what it says in the Terms and Conditions:

If you were thinking about getting this card…

…there is just no rational reason to get it. Between the $75 annual fee, the $144 in monthly maintenance fees beginning on the 2nd year, and the nearly $60 per year in statement fees… this is a ridiculous amount to pay, when all you are promised is a minimum credit limit of just $300. Simply put, Continental Finance’s Matrix credit card is a big ripoff!

As a good alternative, I would recommend you check out this card from Capital One. Yes I advertise it, but I also could do the same with the Matrix Discover but choose not to, because I feel that would be unethical. Take a look at this alternative and I think you will agree with me.