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Back in 2006, First National Bank of Marin was plagued with issues.
As Jennifer Surane reported at Bloomberg, “Federal investigators accused it of issuing credit cards to strapped consumers, then piling on so many fees and obligations that some new clients couldn’t buy a sandwich without hitting their credit limit.”
So it decided to give itself a makeover, changing its name to Credit One Bank and unveiling a logo with a swoosh above the “O.” Two years later, the massive financial corporation Capital One rebranded with a nearly identical logo.
“And so began the improbable story of how one of the top U.S. card lenders… gave an accidental advertising boost to a then-obscure rival,” Surane wrote.
Fast forward more than a decade, and if you’re looking for a credit card with bad credit, you’ve probably seen both names floating around. Here’s what you need to know about Credit One vs. Capital One — and why you should almost always choose one over the other.
First, let’s touch on the companies’ similarities — which, TBH, will be a pretty short section.
Capital One is the fourth largest issuer of Visa and Mastercard credit cards, according to the Nilson Report. Credit One is No. 12, putting it ahead of banks such as TD Bank, BB&T, and Fifth Third. It is, by far, the fastest-growing card issuer in the top 15, issuing 15% more cards in 2019 than it did the previous year.
Both Credit One and Capital One also target “subprime borrowers” with spotty credit histories. (Not sure if you’re included in that camp? Here’s how to get your free credit scores.) Oh, and they also both have mobile apps.
Told you that’d be a short section! Now on to the many reasons why we believe Capital One is superior to Credit One.
We’re not Capital One evangelists, and we often think smaller banks and credit unions are a great choice — especially for people with bad credit. So, to be clear, we’re not saying Capital One is the best credit card issuer out there. What we are saying is, if you’re deciding between Credit One and Capital One, the latter is nearly always the better choice.
Because it’s a major financial institution, Capital One offers a range of products, such as savings and checking accounts and auto loans. It also has credit cards to fit a variety of credit scores and needs, including student and business cards.
Not to mention, many of its credit cards offer rewards like ample cash back and sign-up bonuses, and high-end perks like Global Entry application fee credits and direct points transfers to airlines and hotels.
Credit One, on the other hand, is an online-only institution that offers fewer than 10 credit cards, including one from NASCAR. While its cards are available to users with bad to excellent credit, we couldn’t imagine why you’d choose a Credit One card if you had other options. And, while some of Credit One’s cards offer cash back, none have perks comparable to Capital One’s.
When you apply for a Capital One credit card, you’ll know what you’re getting as far as your chosen card’s interest rate, annual fee, and rewards.
But when you apply for a Credit One card, you’ll just have access to a set of sample terms and conditions that are “for informational purposes only.” (Here’s a 250-page list of the actual terms and conditions that come with its various cards.)
In order to see which Credit One card you might be eligible for, as well as its exact fees and rewards, you’ll need to first pre-qualify through a brief online application. Although this won’t affect your credit scores, it’s still an overly opaque process.
Once you get a Credit One card, the opacity doesn’t stop. After the first year, for example, you won’t know whether your annual fee will be billed in monthly installments or all at once.
While you won’t know Credit One’s exact fees until you’ve pre-qualified for one of its cards, you can probably assume they’re going to be higher than Capital One’s.
For example, the Capital One® Secured Mastercard® (Review), aimed at people with bad credit, charges no annual fee. All of Capital One’s credit cards are also free from foreign transaction fees, making them a great choice for traveling abroad.
In comparison, Credit One’s main card for users with bad credit is the Platinum Visa for Rebuilding Credit. Its annual fee is $0–$99, based on creditworthiness. We’d imagine the $0 fee is reserved for users with better credit — and if you’re in that group, you have an abundance of better cards to choose from. And even if you’re not, you can probably still get cards with lower annual fees from other issuers.
Here are some other high fees that Credit One charges (services that most other credit card companies offer for free):
Some Credit One cards don’t even offer a grace period, which means you’ll start accruing interest as soon as you make a charge. With most other issuers, such as Capital One, you won’t accrue interest on your purchases until after your billing cycle’s due date — meaning you’ll never owe interest if you pay your statement balance in full each month.
Ready for the biggest reason to choose Capital One over Credit One? Customer service.
While no financial company is universally loved, Capital One is a major bank with modern infrastructure and normal standards of service. Its ConsumerAffairs rating is 3/5, based on 1,830 reviews submitted over the past year. Compare that to Credit One’s, which is 1/5, based on 184 reviews.
In J.D. Power’s 2019 credit card satisfaction study, Credit One received 728 of a possible 1,000 points — putting it in last place among 12 banks. Capital One tied with Chase for third, garnering 807 points.
To top it off, one NerdWallet investigation found that Credit One was the subject of more than 5,000 complaints with the Better Business Bureau, putting it in “the top 1% of financial companies that consumers complain to the bureau about most.”
Individuals reported a range of problems, including:
Credit One’s terms and conditions also include this gem: “We may delay increasing your available credit by the amount of any payment that we receive for up to 12 calendar days.” So, say you have a credit limit of $300, which you max out. You make a payment of $200 because you want to use the card again soon. Credit One, however, may not make that $200 available for up to 12 days — keeping your card out of commission for nearly two weeks.
One upside? Since most Credit One cards run on the Visa network, you’ll receive Visa benefits, such as travel insurance and $0 fraud liability for unauthorized charges. Credit One cards also report your behavior to the three credit bureaus — Experian, TransUnion, and Equifax — which means that making on-time payments (if they let you!) will help build your credit.
By now, you’ve probably gotten the message: Capital One trumps Credit One in basically every category. Even if you have bad credit — and have been targeted by Credit One — we’d advise you to apply for a Capital One card instead.
You may not get travel rewards (yet!), but you’ll be able take advantage of the credit-building capabilities of credit cards, without worrying about any shady business practices.
Here are two Credit One alternatives we recommend:
With this secured card, you must put down a refundable security deposit of $49, $99, or $200, for which you’ll get an initial credit line of $200. Or, if you have the cash, you could put down $1,000 for a credit line of $1,000. After you make your first five monthly payments on time, you may be eligible for a higher credit line. (And, unlike at Credit One, you won’t need to pay for it!)
Just like unsecured cards, secured cards help you build credit. (The only difference is the deposit.) With this card, for example, Capital One will report your behavior to the credit bureaus, letting your on-time payments bolster your credit profile. Eventually, you could even upgrade to an unsecured version.
Not many cash back credit cards are available to cardholders with poor credit — but this secured option from Discover is an exception.
You’ll earn 2% cash back rewards at restaurants and gas stations (on up to $1,000 of eligible purchases per quarter). You’ll also get a one-time introductory bonus of double cash back on all your purchases in the first year, awarded at the end of that year. Once you receive ’em, you can redeem your rewards for statement credits or gift cards.
Whichever card you choose, we’d advise you to steer clear of Credit One. For more ideas, check out this list of the best cards for building credit.
Best Credit Cards for Bad CreditFind even more options here
Despite their similar names and logos, Credit One and Capital One offer very different services — and have very different reputations. Whereas Capital One is a respected financial institution, Credit One gets poor ratings for its opaque terms and high fees. When it comes to credit cards for bad credit, we’d say there are better options than Credit One.
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The information related to Capital One® Secured Mastercard® has been collected by Credit Card Insider and has not been reviewed or provided by the issuer or provider of this product.
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