Considering applying for a Credit One credit card? Here’s why you should think twice.
If you’re working on improving your credit score, you may have received a mailer from Credit One Bank inviting you to apply for a credit card. This card issuer targets consumers with bad credit, and it offers several different cash back credit cards.
At first glance, a Credit One credit card could seem like a good deal, especially if you already have a mailer saying you’re prequalified. Unfortunately, just because it’s relatively easy to get one of these cards doesn’t mean it’s a smart choice. There are several big flaws that make Credit One Bank one to avoid.
A lack of transparency
Most credit card companies let you view the terms and conditions of all their cards and apply for any card you want. Credit One Bank operates much differently.
You can view terms upfront for some of its cards, but on others, the information available online is for informational purposes only and can be very broad. For example, one card lists its annual fee as anywhere from $0 to $95 in the first year, and from $0 to $99 after that. In the second year, the fee might also be charged annually or broken down into 12 monthly payments.
To apply for a card, you first need to go through the prequalification process. You enter some personal information, Credit One Bank runs a soft credit check (which doesn’t affect your credit), and then it will show you which cards you prequalify for, plus the official terms and conditions.
Excessive credit card fees
A big reason Credit One Bank gets a bad rap is its fees. Its annual fees tend to be higher than competitors’ cards with similar features. There are also extra fees that seem excessive at best and arguably predatory at worst, including:
- An “express payment” fee: While standard payments to Credit One are free, it can take up to seven days before that payment is reflected in your available credit. If you want to pay off your balance more quickly, you need to pay $9.95 for an express payment.
- A fee to increase your credit limit: Multiple cardholders have reported a fee for a credit limit increase, and the standard amount seems to be $24.99. Credit One Bank doesn’t always charge this, so it’s likely done on a case-by-case basis.
When you’re rebuilding your credit, it’s important to minimize the amount you spend on fees. Credit One credit cards don’t help with that, and that’s a major flaw since their main appeal is how easy they are to get.
Mediocre rewards (at best)
Credit One Bank’s cards do offer cash back, but their cash back rates are low compared to their annual fees and credit score requirements.
The Credit One Bank Platinum Rewards Visa is a good example. It earns 5% cash back on your first $5,000 of eligible purchases per year in select spending categories. On all other purchases, it earns 1% back. That rate is similar to what some of the best no-annual-fee cards offer. The problem is that this card costs $95 per year.
There’s also the Credit One Bank Platinum Rewards Visa with No Annual Fee. It offers 2% back, which would be great if it applied to everything, but it’s only on “eligible purchases” — i.e. purchases in only a few spending categories. And you won’t even earn 1% back on everything else.
Those are two of Credit One Bank’s top cards for earning rewards, and they’re for consumers with average-to-excellent credit. Its cards for rebuilding credit has even worse cash back rates.
There are better options out there
With limited benefits and costly fees, Credit One Bank credit cards don’t make sense no matter what your credit score is.
Several of these cards are aimed at people who are rebuilding their credit, but you can find credit cards for bad credit that don’t charge any fees. Some are secured credit cards that require a security deposit to open, but it’s better to pay a deposit you can get back than an annual fee that you won’t.
If you have good credit, then there’s even less reason to give Credit One Bank a shot. A good credit score will make you eligible for many of the best credit cards, and they offer quite a bit more value.