Advertiser Disclosure

About MagnifyMoney

State of Our Finances: The MagnifyMoney Survey

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

stateofourfinances-cover-banner1

We launched MagnifyMoney because we believe people are paying too much in credit card interest, paying too many complicated overdraft fees and not earning enough on their hard-earned savings.

Banks are in the business of borrowing money from people in the form of checking and savings account deposits and then lending that money to people who need it through loans or credit cards. Right now, banks are charging very high rates on credit cards, and paying very low rates on deposits. They sit in the middle and enjoy rich profits.

But how much money are Americans leaving on the table (or in banks’ pockets)?  We decided to conduct a national survey to see just how much money people are losing to the banks’ fine print and fees.

Savings

Of those surveyed, 73.4% of Americans keep their money in an old-fashioned branch bank account. That means they are likely receiving 0% on their checking account money and 0.01% on their savings account. Yes, the big banks are paying an average of 0.01% on their savings accounts – that is not a typo.

Of those Americans who have a savings account, the average amount sitting in the bank was was $28,696. If, instead of giving money for free to branch-based banks, people switched to FDIC insured online savings accounts, like the ones offered by Barclays, GE or Ally Bank, they could earn close to 1%. Rather than earning less than $5 a year, they could be getting over $250.

Overdraft Fees

An overdraft happens when you spend more money than you have in your checking account. According to our survey, it has happened to 35% of us. But why do people go overdraft?

53% are just forgetful (mistakes happen).

47% of people go overdraft because they need the money: the month lasts longer than their paycheck.

Last year alone, Americans were charged $32 billion in overdraft fees. According to the CFPB, the amount in annual fees, on average, for accounts that had at least one overdraft was $225. Why so much? Every incident of overdraft costs $35 and banks will charge multiple incidents per day. For example, Bank of America could charge up to $140 per day – even if you only were overdraft by $20 (4 transactions).

Our survey showed that people are definitely fed up: 69% would like an account that does not let you go overdraft and charges no fee to decline. Fortunately, such products exist – like the internet bank Simple and Bluebird by American Express. We hope to help people find these products.

Credit Card Debt

42.4% of Americans have credit card debt. The average balance of those surveyed was $10,902.

Now, you will often hear that the average interest rate is 15%. However, at MagnifyMoney we know that credit card companies engage in risk-based pricing. That means lower interest rates are given to people who pay their balance in full every month and higher interest rates are charged to people who are likely (or have historically) revolved.  That means they pay less than the full balance, and then have to pay interest.

Our data proves this. 75.7% of those with credit card debt, paid an interest rate higher than 15%. The average monthly payment on that debt is $408. At an 18% interest rate, that means the average American will pay at least $1,707 in credit card interest over the next 12 months.

Think about it this way: banks will pay (savings account deposits) 0.01% for money.  So, for $10,902 a bank would pay about $1 in interest. Then they turnaround and charge the average American $1,707 in interest. Not a bad business.

Fortunately, there are options out there to help people save money. Fifty percent of Americans with credit card debt have considered a balance transfer. Of those who completed a balance transfer, 89% would do one again. However, there are still many misconceptions about balance transfers.

People don’t understand how the interest charges work — 31% think interest is charged retroactively and 35.2% don’t know how it is charged.

Some people don’t get the full benefit of the balance transfer because they spend on the card (46.7% of people do that) or by pay late (25% of people fail to pay on time).

Rather than looking online for the best balance transfer offers, an amazing 68.5% of people respond to a direct mail offer.

But, if you choose a market-leading balance transfer, pay on time and don’t spend on the card, the average American could save more than $1,300 over the next 12 months.

Personal loans could also be a great option if you can’t qualify for a balance transfer (or don’t trust yourself with another credit card). Only 36.5% of people with credit card debt considered a personal loan

The survey results are clear

At MagnifyMoney, we believe that people are not getting enough on their savings (less than $4 a year). We think they are being charged too much for overdrafts (an average of $225).  And they are paying way too much for their credit card debt ($1,707 a year).  We think the results of our survey are clear: people are paying far too much for their banking products and services.

The good news: alternatives exist.

State Of Finances

State Of Finances

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

TAGS: ,

Advertiser Disclosure

About MagnifyMoney

MagnifyMoney’s Editorial Code of Ethics

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

At MagnifyMoney and our parent company, LendingTree, all of our writers — both freelance and full-time staff — must adhere to a strict editorial code of ethics whether they are developing product reviews, recommendations, personal finance guides, features, investigative reports, or videos.

Our Commitment to Unbiased and Fair Reporting

MagnifyMoney is an independent, advertising-supported comparison service which receives compensation from some of the financial providers whose offers appear on our site.

Affiliate links help keep the MagnifyMoney site and financial education tools free, but they in no way influence our recommendations, reviews, and other editorial content. You can learn how we make money here.

When articles are clearly based on commentary or opinion, we will note that visibly to the reader.

Whenever there is potential conflict with a source or product mentioned in one of our articles, we will be transparent and forthcoming with that information.

Our Commitment to Accuracy

Our writers strive for 100% accuracy in their work. They must verify all data, names and other pertinent information before publication. Additionally, our team of editors and copy editors provide additional layers of fact checking for all articles.

When corrections or updates to stories are necessary, writers and/or editors must bring it to the Executive Editor’s attention immediately so that any changes are made as speedily as possible.

When information is corrected after publication, the writer or editor will make a note at the end of the story to provide further context.  We will attribute all sources where possible and never plagiarize our content.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

MagnifyMoney
MagnifyMoney |

Have a question to ask or a story to share? Contact the MagnifyMoney team at [email protected]

TAGS:

Advertiser Disclosure

About MagnifyMoney

Credit One Bank Review: Average Credit Welcome But Complicated Terms

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Credit One Bank (not to be confused with Capital One Bank) specializes in credit cards for people who do not have the best credit. Credit One provides access to credit when other people do not. However, it does come at a price.

The potential drawbacks of choosing a Credit One Bank credit card are the fees and conditions that can apply to your account, depending on your creditworthiness.

Credit One Bank Credit Card Terms

Creditone Currently, Credit One Bank offers three main credit cards including the Credit One Bank® Platinum Visa® with Cash Back Rewards, the Credit One Bank® Platinum Visa® for Rebuilding Credit, and the Credit One Bank® NASCAR® Visa® Credit Card. However, the account terms for each card above including the interest rate, annual fee, and rewards program varies, depending on your creditworthiness. This means Credit One Bank will take a look at your credit history and income before offering your credit card terms and conditions.

There are 26 available credit card agreements you may be offered by Credit One Bank after applying. Fortunately, you can prequalify to review which specific terms you will receive, and the good news is this pre-qualification won’t impact your credit score.

Interest Rates, Fees, and Fine Print

Credit One Bank does provide an easier to read terms-and-conditions disclosure document with a range of the possible fees, interest rates, and terms you may encounter as a cardholder.

We’ve also put together a quick overview of the facts:

  • The minimum credit line is $300
  • Variable interest rates vary by product. In general, the ongoing purchase variable APRs across products range from 20.24% - 26.24% Variable.
  • Accounts may or may not have a payment grace period
  • The annual fee ranges from $0-$99
  • If you add on an authorized user, the fee is $19 annually
  • The late payment fee is up to $38
  • The returned payment fee is up to $38

As you can see from the terms above, the cost of borrowing from Credit One Bank can vary greatly, specifically when it comes to the annual fee. You can pay an annual fee from $0-$99. That’s no small amount of money.

For the first year, the annual fee is charged to your account right away. This means when you first receive the card the annual feel will be subtracted from your available credit line. After the first year, the annual fee may be charged all at once or split into 12 monthly payments.

The payment grace period

Another area besides fees to draw attention to is the payment grace period. The account you qualify for may or may not have one.

A payment grace period is a certain amount of days that credit card issuers give you to pay the bill before applying interest. Credit cards that don’t have a grace period begin charging interest on the day the purchase hits your account. For example, if you were to buy a nice, new couch on a credit card today, interest would start applying to that purchase today.

Again, terms vary, depending on creditworthiness, so it’s possible you can get the best terms that Credit One Bank has to offer, including the lowest possible interest rate, no annual fee, and an account with a payment grace period. But you should be aware of the most expensive scenario.

Cash Back Rewards and Card Benefits

Credit One Bank offers five cash back rewards programs and a few additional card benefits.

There are three cash back programs that reward you for everyday spending like gas, groceries, and dining, and two other programs that reward you for auto and NASCAR.com related purchases.

Here are the five rewards programs:

Cash Back Rewards Program

  • 1% on eligible purchases, terms apply.

NASCAR Cash Back Rewards Program

  • 1% Cash Back on Eligible Purchases and Double Cash Back at the NASCAR.com Superstore, terms apply.

If you qualify for a cash back program, the cash back that you earn each month will be credited to your account statements. The cash back credited to your account doesn’t count as a payment, so you’ll need to make your regular minimum payment to keep your card in good standing.

Additional card benefits

As mentioned, free credit score tracking and a credit report summary are included. Visa Zero Fraud Liability is another benefit and means you won’t be held responsible for unauthorized purchases on your Visa account if you report them in a timely manner.

How to Prequalify for Credit One Bank Credit Cards

On the Credit One Bank website, you can prequalify for a card without a hard inquiry. You just need to type in your address, Social Security number, birthdate, and income.

Make sure to read through the terms you receive after pre-qualification for the interest rate, the fees, and whether you get a payment grace period before thinking about moving forward with the full application.

The Cost of Using a Credit One Bank Card

So, what’s the cost? That’s always the most important question.

Taking a look at the cost of cash back rewards first, the interest rate range offered by Credit One Bank is slightly higher than other rewards cards with similar cash back offers.

Here are a few cash back alternatives with lower interest rates and no annual fee:

  • The Citi® Double Cash Card – 18 month BT offer: Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay, and an APR of 15.74% - 25.74%* (Variable) with a $0* annual fee.
  • The Capital One® Quicksilver® Cash Rewards Credit Card offers 1.5% Cash Back on every purchase, every day and 0% intro on purchases for 15 months an a 0% intro on balance transfers for 15 months, 16.24% - 26.24% (Variable) APR after that. There is a $0 annual fee.

For the most part, the cheaper cash back rewards cards listed above are also ones that require decent credit, which may be a reason why you would try applying with Credit One Bank instead.

However, Credit One Bank cards can come with fees you need to be mindful of before thinking they’re an ideal alternative. You may qualify for Credit One Bank with less-than-perfect credit, but the catch is you may also get approved for less-than-desirable credit card terms like high interest and a high annual fee.

Example of what it costs to borrow

To analyze the cost of borrowing from Credit One Bank, let’s take an example:

  • 24.15% variable APR
  • $99 annual fee
  • No payment grace period
  • 1% cash back on gas and grocery spending

If you charge $500 of furniture to this card as soon as you get it, it’ll cost you about $62 in interest to pay the balance off in 12 months with regular payments of $51 per month.

The exact interest cost will vary, depending on interest rate fluctuations and when you make the purchase during the month. (Remember, there’s no grace period.)

PaymentInterestPrincipal
$51$10$459
$51$9.23$417.23
$51$8.39$374.62
$51$7.53$331.15
$51$6.66$286.81
$51$5.77$241.48
$51$4.86$195.34
$51$3.93$148.27
$51$2.98$100.25
$51$2.02$51.26
$51$1.03$1.29

In total, you would pay about $161 (interest plus the $99 annual fee) to borrow $500 during your first year as a cardholder. The next year, you also have another $99 in annual fees ($8.25 per month) to look forward to paying before even swiping your card on new purchases.

From this example, you can see fees play a big role in costs and are a factor you want to measure if you prequalify for a Credit One Bank credit card.

Another caveat to this is if you planned to use this card for cash back specifically, you would need to pay off your balance the same day you make a purchase. Otherwise, interest charges from having no grace period can eat away at the cash back earned.

Other Ways to Borrow Money and to Build Credit

The big advantage of Credit One Bank is that you can prequalify without a hard inquiry so it doesn’t hurt to find out what terms you will receive. There are a few other credit card issuers that offer the same convenience. If you’re not sure whether you can qualify for cards with lower fees, you can search for providers that offer prequalification here.

To build or rebuild credit, you can also turn to store cards or secured cards. Learn more about how to build credit with a secured card here. It’s worth mentioning that not all store cards and secured cards are cheap either. You need to review the fees and interest rates to find the most affordable option just like you would with the Credit One Bank accounts.

Finally, if your focus is solely getting your hands on cash, a personal loan may offer you a better deal when you need to borrow money than a credit card. You can also prequalify for personal loans without impacting your credit score. You can shop for personal loans here.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor here

TAGS: