Have you received an invitation to apply for a Credit One credit card in the past? When your credit score is less perfect or downright bad, your choices for cards can be be limited. However, that shouldn’t require you to be raked over the coals while you’re rebuilding your credit rating, either. Please read our review to learn what you can expect with a sub-prime Credit One credit card.
Confusion and complaints
To be frank many people are somewhat confused by the name, logo, and graphics, which are quite similar to the better-known Capital One (pay close attention say that you know which you’re applying for). One could be excused for thinking they are one and the same, but being forewarned is being forearmed.
The difference is that Credit One’s cards are designed for those with bad credit in mind. Capital One, although it does offer credit cards designed for those with little credit history, is a major card issuer — and therefore has cards for those across the credit quality spectrum, including rewards cards for those with fair credit, good credit and excellent credit.
Somewhat slow payment processing times is another frequent complaint about Credit One. Standard payments take about four business days to process. You can expedite your payments using the “Express Pay” option, which allows them to be processed by the next business day, but it costs $9.95 to do so. According to the credit rating agencies, payment history (i.e. whether you pay by the due date) makes up 35% of your credit score, so it’s important to make sure your payments go through on time.
As with most cards designed for those with bad credit, the Credit One charges you for the privilege of rebuilding your credit. The fees and interest rates associated with your card will depend on your creditworthiness.
Annual Fee: Depending on which terms you get, the annual fee will range between $0 – $99
Interest Rate: 15.65% - 24.15% Variable, depending on your credit quality
Credit Limit: $300 to $500, depending on your credit history. Future increases might be granted at the issuer’s discretion. Keep in mind that the first year’s annual fee will immediately be billed to your account when it’s opened and reduce your available credit by that amount.
Now if you just saw that, you may think “That’s not the that bad for someone with really awful credit or a recent bankruptcy.” But there’s one major thing you need to consider – the fact that there is no grace period on new purchases.
This means interest will begin accruing on the date you make your purchase transactions.
It’s true that all credit cards charge interest on purchases, but the difference is that most other issuers provide a grace period; after your 30-day billing cycle closes, if you pay the full balance within 21 days from that date, you won’t get charged interest. But if you don’t, the interest charges will be tacked on in the following month. However, if you tend to carry a balance most months this is a moot point since that would nullify any card’s grace period provision.
Credit One’s products, meanwhile, start charging you as soon as the purchase posts.
Credit One offers an unlimited 1 percent cash back on gas and groceries, and those rewards post to your account each month in the form of a statement credit. Any kick-back on your spending is good, but these rewards aren’t enough reason to keep the card longer than you have to. For one thing, your ability to earn rewards will be limited by the card’s low limit. For another, the interest you pay on purchases (interest starts accumulating as soon as the payment posts, remember) and the annual fee, will cancel out any rewards you earn. So, take the rewards for what they are — a nice little reimbursement for some of your spending — and graduate to a fair-credit card (even one without rewards) as soon as you’re able.
So, is Credit One legitimate?
Absolutely. Since Credit One discloses the terms and conditions in the application’s fine print, the card certainly can’t be labelled as being a scam or being intentionally deceptive. It is what it is – simply a sub-prime card that has some rather high fees (which, to be fair is typical of cards in the subprime card market and is necessary in order for issuers to make a profit). So, as long as you know what it is and it fits your needs, it’s a card that could make sense. However, many people in Credit One’s target market are not all that financially sophisticated and can feel taken advantage of when it comes to the terms offered. Regardless of your credit, there’s no excuse for not doing your homework and being informed.
The main silver lining to the Credit One card is that your account activity will report to the three credit bureaus. That means if you use the card responsibly, it can help you rebuild your credit history over time and eventually result in a strong credit score. However, there are should be many other less-expensive options available for those who just want to rebuild credit. As an alternative, here are some secured credit cards to consider.
Updated April 8, 2016