Did Capital One raise your interest rate?
A close family member of mine recently told me that Capital One raised her interest rate without reason. Apparently they raised it from about 5% to a whopping 15%, which, on a multi-thousand dollar balance, will add up to a wad of extra interest paid each month.
After some extra investigation, including running her free credit report via AnnualCreditReport.com (the REAL government website), I found that she made no credit mistakes since 2004 (and only minor ones back then anyway). So Capital One did truly jack up her interest rate through no fault of her own.
So she called Capital One and was told “it’s nothing that you did. The company decided to increase across the board due to the economy“.
So she, and many others, are paying for the faults of others. In my relative’s case, though, she has the option of transferring the balance to a Discover card at 0% for almost a year. Even with the 3% transfer fee, she stands to save hundreds in interest over the next year.
After googling for more issues with Capital One and increased interest rates, I found the following:
- http://www.consumeraffairs.com/credit_cards/capital_one.htm
- http://www.my3cents.com/showReview.cgi?id=56593
- MSN Money forums
And there were many more!
How about you? Did you see your interest rate spike? Did you call Capital One about it and get the runaround or “sorry, it’s not you, it’s us” reply?
Hi CD,
Capital One also raised my interest rate from 7.9% to 17.9% starting next month. Thankfully all my balance is on a 0% interest for the life of the balance; otherwise I would have had to close another account. (The first was Chase, who raised my rate from 9.9% to 18.9%.) The notice from Capital One specifically mentions “these challenging economic times,” which would make me laugh if I wasn’t so angry I could scream. Yeah, those poor banks, getting billions of dollars are having trouble “making it.” The notice does say that the increase doesn’t affect any special transfer rates (and I’ve checked my statements to be sure that is the “category” of my balance). But I’ll be extra diligent from now on!
All I know is that once things turn around and these companies want my extremely good business again, they can suck it.
Thanks for writing such a great blog!
Melanie
Well, no, Capital One actually cut my interest rate down to 0% – lucky me! Except for the fact that it’s because I wasn’t paying them.
I got a notice stating that Capital One raised my Platinum card (that I got specifically for the low interest rate) from 1.9% variable to about 26%
But as of today, it still carries the 1.9% rate, maybe because I haven’t used it since April of last year?
They raise my rates. I had prime lock, which locked my rate to prime, so it was around 3%. They said they were raising it to 9.5%. I called them and they told me that I made all my payments on time and had nothing in my credit history that would cause a bump I knew that anyway because my credit score was over 800 then. Anyway, they said that they were raising rates for everyone because of troubled times and my 9.5% offer was the best one that they gave and only a handful of people got that rate.
I tried to negotiate the rate down saying that I was a long-time loyal customer and I would not accept them punishing me by tripling my rate. Even though 9.5 wasn’t so bad of a rate, I declined the increase and they shut down my card a month later.
I’m actually glad they are out of my wallet now. 🙂
Well, I don’t have a Capitol One card, but I know this is going on with all cards. Both my Discover and Citicard sent similar notices. I promptly transferred away from Discover and am looking for a similar transfer away from Citicard. My mother received a similar notice for her Chase card. Because she’s no longer using credit cards, she called them and told them she didn’t accept the new rate and they closed her account. She doesn’t have to pay the full chunk and can pay it off slowly as she was doing, but won’t be able to charge on it anymore (no problem). I completely agree with the assessment that they are expecting us to pay for other’s defaults and it makes me so angry! Soon, our family won’t have any credit card debt anyway so this is just one more reason to pay it off quicker!
I haven’t used my Capital One card in years for two reasons: I’ve had a $500 limit on my “platinum” card since I got 8 years ago. Despite repeated requests, it was never raised. Then my rates started creeping up. While I was using it, paying it off every month and never going over my limit, my “fixed” rate went from 11 percent to 19 percent. Since I stopped using it years ago, it has jumped to 24 percent. The only reason I haven’t canceled it is because it’s the oldest open item on my credit report.
@Kris, make sure you use it every few months or else they’ll close it for you.
I don’t have a Capital One card but my increase rate was increased on a couple of my other cards. Luckily, none of them have a balance so I don’t really care about it.
@ Clever Dude, yeah, you’d think they would have closed it by now, actually. I never activated the last one they sent, a full year ago. It’s on my list of things to do after I file my quarterlies Monday.
We have a 0% til ’10 Capital One card. Our last payment was late and they bumped it up to 11%. My husband called them and requested they reinstate the 0% which they DID.
We never expected them to reinstate it as the late payment was ALL our fault (thought it was sent but never clicked the “submit” button when paying online). So, we have nothing but good things to say about them…
How can one accept this kind of unscrupulous increase in interest rates that too because of others? Is this also a financial crisis could affect the people? Regulatory organisations should intervene.
You people amaze me. Newsflash. Credit is not a right, it is simply a service banks provide to get profit. As any service, it comes at a price. The price of service can go up depending on circumstances. The amount charged has to be large enough to enable the lender to a) cover the losses b) cover the operational expenses like taxes, interest paid on deposits including on money in reserve, employee salaries, rent c) get some profit. You cannot expect businesses to operate at a loss just because charging you higher price because of a) higher losses b) higher needs for reserves which leaves less money available for lending.
The credit card default rate is right now at 12%. So let’s do some math. Let’s say you lend your own $1000 to 10 people, $100 each. You are not a charitable organization, so for you this is an investment and you expect some return on your investment. After all you have your own bills, like mortgage, for example, or if you are a bank like salaries for your employees. Let’s say one of these 10 people defaults i.e. you lost $100. Since you are not a charitable organization, and you have your own bills, you need to make up this money. I.e. you need to get $100 on the remaining $900 you gave to other 9 people. Oops, this is a little over 11%. What if in some subgroup 2 people default? I.e. you loose $200? Then you need to get $200 in interest from other $800, i.e. you need to charge 25% just to cover your losses.
But this is only if your own business expenses are 0. But let’s say you got this money as a low interest loan. Let’s say the loan was at 1%, but you couldn’t lend all the money because you needed to keep part of this money in reserve. I.e. you borrowed $1100, put $100 in reserve and lent $1000.
So how can you continue charging 5% from others? Now, if this was a fixed interest loan at say 5%, you have to. But if your contract gives you the right to raise the rate, would you do it or would you operate at a loss because you are so nice and because you think it is “unfair” to others to pay for somebody else? But if you do it, how will you pay your own bills? What about your employees, what is fair for them? Should you just fire them?
Think about it. Pretend you own a small bank with a few employees and figure out if you would operate at a loss because it is “unfair” for some of your customers to have to pay for others. Think also about what is “fair” for your family and your employees.
@Steve: “How can one accept this kind of unscrupulous increase in interest rates that too because of others?”
If you owned a business and your operational expenses went up, wouldn’t you raise prices on your services too? Or would you fire everyone who works for you and operate at a loss? And no, it is not “unscrupulous” – this was written in a contract, that rates can go up. Higher business expenses in form of higher losses and higher need for reserves translate into higher rates. This happens with all businesses – if you go to a store that had some problems with theft, you are paying the price in terms of higher cost. If you don’t like the price increase, stop buying a product.
@Melanie: “The notice from Capital One specifically mentions “these challenging economic times,” which would make me laugh if I wasn’t so angry I could scream. Yeah, those poor banks, getting billions of dollars are having trouble “making it.””
Yes these are challenging economic times with many people defaulting on their loans. As to banks getting billions, the amount of the losses is in the trillions. If you are thinking of TARP, though, you probably are not aware that a) many of these banks were FORCED to take the money and these “billions” come at a price b) many of the banks are repaying it – Chase for example is one of the banks who just got an approval to return this money and will be repaying it as soon as the government takes it c) the government money are a loan on which they pay interest and for which they also gave stock warrants. When they are repaying it, they have to pay pretty steep price for these stock warrants. In case of a small bank who repaid TARP a couple of months ago, buying back these stock warrants cost the bank additional 10% on the amount. Now this is not 10% a year, this is 10% for only a few months the bank had the money, and it is in addition to 5% a year on preferred stock the government got.
Incidentally, do you know how many people in banking business lost their jobs this year? Not executives, people who have nothing to do with lending like IT personal, for example. So according to you, banks should continue keeping low interest for you because you’ve been so nice, operate at a loss, and fire more people instead. Right?
@Tricia –
Amazing that sometimes credit companies seem to be on your side. Marketwatch put together a pretty good article with advice on how to best negotiate with your credit card company – it’s worth a look:
http://www.filife.com/guides/how-to-negotiate-with-credit-card-companies
I completely missed it. Ours went from 8.9 to 17.9 for the last two statements. We don’t carry a balance but . . . time to shop for a new credit card.
Back in April they told us our rate was going from 6.9 to 29.6. I didn’t even bother to call them to find out why. We have excellent credit, were carrying about $8k balance and paid on time every month. Had to be a random selection to thin their herd.
At least they gave us a 2 month warning on the change.
I took my business elsewhere.
Will never use captial one again, had my fixed 8.9 jump to 17.9 for no reason, besides they can’t run a buisness. With them for 4 years never missed a payment, allways payed more than min amount. Will be switching credit card companies. I urge everyone to do the same. Too big to fail, keep driving away your customers, and then they will see.
Same boat as prior user. They changed interest rate from a fixed 8.9% to 17.9% on the economy card, long term customer. Rather than closing it, I’ll just be buying a stick of gum each month so they have to mail me a billing statement. All so a few VP’s can get their annual bonus…
Chase raised my rate on two cards out of the blue. I was pretty surprised because I had been great with making payment and I also had a relatively low balance compared to my credit limit ($600 owed with a $6,500 credit limit). I also got a interest rate hike from Amex AND they closed my account. When I called, they informed me that they closed my account because I was ONLY making the minimum payment and that presented a risk.
Yes! The same EXACT thing just happened to me. My rate got jacked 10% from 5 to 15%. Called and they said it is what it is. Then as I demanded a way to opt out (they told me I missed the deadline, but I never got a notice!) they hung up on me. Anyone every get hung up on but chalk it up to getting disconnected after being put on hold multiple times? I don’t think this is an accident.
Yikes! Me, too…mine went up 7.5% and they said mine was one of the lower ones…she said some were at 20%…that made me feel SO MUCH BETTER………right.I am sick, sick, sick! I will never get out of this…
I thought there was some help out there.
My husband and I too have experienced Rate Jacking by Capital One. We also did not receive the letter from them stating we must opt out. The bottom line is that, there is nothing we can do despite the fact that we too have consistently paid more than the minimum payment. The challenge we face is that like so many others, I have lost my job and we are living on one income. Yet, we have committed to paying off our debt. This practice is punitive to those of us who didn’t default on our debt and unethical in light of the fact that this practice will be illegal come 2010.
I am just wondering if anyone has discovered any recourse at this time or if we really cannot do anything to challenge this practice?
Another unhappy Capital One Customer
Same with me and Ive been trying to fight back. I reecive both electronic and paper statements. unny how no opt out form was attached to my electronic statement but Capital one claims thety sent me one through the mail, first by itself and then with my paper statement in march, then they state february. I ask them to prove they sent it and that I reecived it they stated they didnt have too. Is there an attorney who can help with these crooks who default on the cardmemeber agreement by not allowing us our rights and then send derogotory information to the credit bureau when we dont comply? I WANT JUSTIC ON THEM.
KITTY. YOU’RE AN A…HOLE. HOPE THEY SCREW YOU! I’m a 15 yr customer and they gave me the bs whine and dance about poor economic times. I know your type. You’re a late night creeper. We were abused and you don’t know what the F you’re talking about. Why should WE pay for Capital One’s sloppy credit decisions? Your comments are totally asinine. Are you really that defective? I hope all your creditors charge you double for their “poor economic times”. I know you. You’re a slum lord or something close trying to justify your sociopathic lack of concern for the human condition and gouge your loyal customers. You’re disgusting even trying to defend abuse like this. I truly hope you get email alerts when this thread is updated. Normal people would be upset by reading a response like this but somehow I know you’ll just have a smug sneer. You’re a freak. Just ask your “friends” and neighbors.