The Continental Finance Cerulean Hybrid Card is a Discover affiliated card available to those who may be suffering from poor to outright bad credit. On the surface, the terms and conditions of the card may seem excessive.
However, the card is offered to those whose who most financial institutions would consider a high risk to lend to. As a result, the fees are going to be very high.
These excessive fees are not exclusive to those acquiring a card from Continental Finance as other credit card issuers do require similar high fees and somewhat restrictive terms.
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The Relationship with Discover Card
A common misconception about this card is that it is issued directly from Discover. The notion that Discover would issue a such a credit card might be somewhat confusing to those with experience in applying with the company.
The reason for such confusion is Discover is known for:
- Having rigid terms for approving credit cards
- Turning down those with less than stellar credit
To dispel the confusion, this is not an actual Discover Card. Rather, it is a credit card issued by Continental Finance and the transactions are processed by Discover on behalf the Delaware based financial institution named Continental Finance.
Who is Continental Finance?
Continental Finance is a Subprime Lender. The term subprime lender does have negative connotations, but it is important to point out these lenders are in the business of offering credit to those who otherwise would not be able to be approved for a credit card elsewhere.
Under normal circumstances, when a credit application is processed, a check will be performed on the credit worthiness of the applicant.
Bad credit will usually result in a denial of the application.
With a subprime card of this nature, the lender makes credit available albeit with stronger terms.
There are two commonly cited benefits to using this card:
- This card can be used anywhere a Discover card is accepted. Again, this is not a Discover card, the Discover company merely processes transactions on behalf of the actual lender, Continental Finance. One major benefit here is the card will be accepted anywhere the Discover Card is. This means the card can be used for numerous gas, retail, and online purchases.
- The Cerulean Hybrid Card may be helped to rebuild credit. The high costs associated with this card can help those with bad credit in the sense that each and every timely payment made on the card will ultimately contribute to the overall rebuilding of a credit score. Conversely, those who do not pay their monthly premiums on time would be further harming their credit and driving up the fees they would be required to pay.
The Credit Limit on the Card
There is a standard credit limit that comes with the card for all applicants.
- $300 is the base starting credit limit on all new accounts.
Interest Rates and Terms
There may be variations on fees and interest rates based on the state the applicant lives in. Researching into the exact figures regarding fees and interest rates on a per state basis is recommended. That said, the variation in numerical figures likely will not be significant.
The interest rates on the card can be considered very high. Such is the case with a credit card, any credit card, devised for use by those with bad credit.
- Up to 29.9% Annual Percentage Rate (APR) for purchases. This rate will be based on and can vary depending on the current prime lending rate in the market.
- 29.9% Annual Percentage Rate (APR) for cash advances. As is the case with the interest rate on purchases, the rate will be based on and can vary depending on the current prime lending rate in the market.
Specific rules are in place regarding the way in which interest is to be paid. Certain repayment methods have the ability to reduce the actual amount of interest paid on the actual cards.
- Payments in full by the end of the payment due date eliminate interest on purchases. The payment due date will be a minimum of 25 days beyond the close of each billing cycle.
- No waiver exists on interest for cash advances. The interest on cash advances begins on the actual transaction date. Even if the balance on the card is paid in full by the end of the billing cycle, there will be interest charged on the account.
- No minimum interest charge. The account does not come with any requirement to pay a minimum interest charge.
Terms, Conditions, and Fees Associated with the Card
Not every credit card comes with transaction, annual, or usage fees.
However, any card that is designed to be issued for the purpose of subprime lending likely comes with fees much higher than would be the average among cards that fall under this category.
Maintenance and Set Up
Among the more controversial aspects to this card would be the maintenance and set up fees.
Many account holders are surprised by the fees associated with the card but, in truth, these surprises arise due to not reading the terms and conditions section of the card which clearly and explicitly state the fees which affixed to the card when it is activated.
- A $75 annual fee is assessed. Before account holders begin using the card, a $75 annual fee is charged to the card. Therefore, the $300 maximum credit threshold is reduced to $225 as soon as the card is received. For those who acquire more than one card, the maximum credit available becomes $195.
- A $144 annual maintenance fee is charged. This fee is charged at a rate of $12 per month. The fee is not assessed for the first year the card is open, but once the second year starts, so does the monthly maintenance costs.
An Option for Rejection is Available
Those who receive the card and learn about the annual fee have the ability to back out of the agreement and cancel the card with no questions asked provided two factors are present.
- First, the card must never have been used.
- Two, no payments have been made on the card. Once a payment has been issued, the card automatically becomes activated since a payment is a form of actual activity on the account.
The Transaction Fees Associated with the Continental Finance Cerulean Hybrid Card
Certain fees are charged to certain uses of the card. Transaction fees, however, will not be issued for the first twelve months the card has been opened.
- Cash Advance Fees. Either a $5 or 5% of the amount of each cash advance will be charged. The greater amount is the one that is to be affixed.
- Foreign Transaction Fee. Each and every foreign transaction comes with a 3% fee.
Those who are not diligent in the means in which they make their payments on the card may be subject to a penalty. Two common penalties might be assessed:
- Late payment fees of up to $35 might be assessed.
- Returned payment fees due to a bounced check of up to $35 might be assessed.
Other Fees Associated with the Card
Other fees might be issued to the balance of the card. Anyone wishing to apply for this card should review all the fees associated with it to avoid being less than pleasantly surprised with the extra costs added to the balance of the actual card.
- $200 Account Processing Fee. This is a fee that might be assessed the first month the card is activated. The fee covers administrative costs associated with actually turning the card on and allowing the account to go live.
- $4 Internet Payment Fee. For those accessing the convenience of using the internet to make an payment on the card, a service fee is charged.
- $4.95 Paper Statement Fee. Anyone who opts to receive a billing statement via the mail will be charged a monthly fee.
- Credit Limit Increase Fee. Those requesting their credit limit be increased shall be required to pay $30 for each $100 the credit limit is increased. Hence, a $1,000 credit limit increase comes with an additional cost of $300 to the balance of the card.
- $30 Additional Card Fee. A second card can be ordered, but there will be a $30 fee assessed to cover the processing and production of the new card.
The Issues Surrounding a Security Deposit for a Secured Card
Credit cards issued to those who may have very bad credit can come with unique requirements designed to help protect the assets of the financial institution, which is approving accounts considered very risky.
To protect against a default on a new card, Continental Finance may require a deposit.
$300, for example, may be required to be deposited to secure the $300 in credit.
If the card holder makes all payments as required with not defaults, the $300 can be withdrawn. There are other specific rules associated with a security deposit on the card.
- Additional deposits may be made to increase the limit. After the account has been open for 90 days and three timely monthly payments have been made, the maximum Deposit Account balance can be boosted to $2,000. No fee will be charged for a credit limit increase.
- Withdrawals of security deposits come with restrictions. Withdrawals on the card cannot be done while there are remaining balances on the card or the account holder still retains possession of the card. Only when the account is paid in full and the statutory deposit time period expires can a withdrawal of the security deposit be made.
The Continental Finance Cerulean Hybrid Card Will Have Value to Some
On the surface, the Continental Finance Cerulean Hybrid Card might seem like a credit card with terms that are just too difficult to deal with. Those with such assessments fail to realize the purpose of the card is to designed to help those who may find it impossible to acquire a credit card or rebuild their credit by any other means.
For those with limited options, the card may be of great value provided a clear and total understanding of the terms, conditions, and fees is gained.
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