America's fastest-growing credit card is also its least favorite

 
 
Posted7/1/2018 1:00 AM
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  • Customers filed more grievances about Credit One last year than Citigroup and JPMorgan Chase combined, although the Las Vegas-based lender has issued a 13th as many cards, according to Federal Trade Commission data.

    Customers filed more grievances about Credit One last year than Citigroup and JPMorgan Chase combined, although the Las Vegas-based lender has issued a 13th as many cards, according to Federal Trade Commission data. Thinkstock photo

Credit One Bank is America's fastest-growing credit-card issuer. It's also the most complained about.

Customers filed more grievances about Credit One last year than Citigroup and JPMorgan Chase combined, although the Las Vegas-based lender has issued a 13th as many cards, according to Federal Trade Commission data. On a per-card basis, Credit One got twice as many complaints as Wells Fargo & Co., even though that bank's numbers include unrelated issues, like its fake-account scandal.

The gripes run the gamut: Some cardholders lamented that they had trouble logging in to the company's website when it came time to pay their bills, which forced them to pay by phone and incur a fee. Others said they were deceived by Credit One's logo, which looks similar to that of Capital One Financial Corp. There was also lots of grousing about the company's other fees.

Credit One sometimes charges an annual upfront fee of $75, even on accounts with credit limits as low as $300. Payments take as long as a week to be credited, unless customers pay a $9.95 express-payment charge. But don't be late: That costs $35. Optional "credit protection" costs about 1 percent of the balance per month. Interest rates are around 24 percent, and some accounts don't have a grace period, meaning Credit One charges interest even if the balance is paid in full every month.

All these fees add up: Credit One reported $579 million in fee revenue last year, a 25 percent increase compared with 2016, according to reports the company files with the Federal Reserve. The company gets most of its noninterest income from servicing fees.

"Credit One Bank vigorously monitors and addresses all customer concerns that we receive, and we are proud to provide credit to millions of working Americans," John Coombe, a spokesman for the bank, said in an emailed statement. "We continue to look for opportunities to enhance our card members' customer service experience." He said Credit One couldn't evaluate the FTC data without being able to review it in its entirety.

Credit One is owned by Sherman Financial Group, a closely held investment company founded by billionaire Ben Navarro, who earlier this year bid for the National Football League's Carolina Panthers. Sherman also owns the largest buyer of charged-off consumer debt in the country. When Credit One borrowers don't pay their balances, the company sells those obligations at discounted prices to Sherman and other debt collectors.

During the bidding process for the Panthers, some owners of other teams voiced concerns about Navarro's association with debt collection, people familiar with the matter told Bloomberg. Hedge fund manager David Tepper, already a minority owner of another NFL team, ultimately won the bidding.

Credit One received roughly 14,700 complaints in 2017, a 46 percent improvement compared with the previous year, FTC data show. Still, that was the most complaints per card among the 11 largest U.S. issuers.

Credit One had about $5.83 billion in outstanding loans across 11.9 million cards in 2017, a 23 percent increase from the previous year, according to the Nilson Report, an industry publication. That was the fastest growth among the 20 largest credit-card issuers tracked by the publication.

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