Capitol One: What's NOT going to be in my wallet!!

[Mrs. Peel]

I got a notice in the mail the other day that the interest rate on my Capital One Visa (of the What's In Your Wallet commercials) that I've had for years and years is going up from a fixed rate of 6.99% to 15.99% as of september 16! I have an excellent credit score, in the 800s, and have never missed a payment. I called customer service and after wading through their menu (they don't give you an obvious option to speak to a human) and being on hold 10 minutes, I was abruptly told this was the ONLY rate for my account available. Yet on their website, they are offering rates of 7.99 up to 12.99%. I mentioned this to the customer service rep who indicated those were probably introductory rates, but said I was free to apply for any of them, but the rate for my current account would be 15.99% (variable, yet!) and that was that!

The thing is, I almost didn't even open the notice they sent me. I'm always getting junk mail from Capital One. I wonder how many people will throw their notices in the trash unopened and never realize their interest rate has skyrocketed. How many people actually read the fine print on their bills???

So, I Googled Capital One to see if I could find any information about rate increases and found one person complaining on a message board (below). His/her account almost totally mirrors mine, except *I* was the one who did the hanging up in disgust at the end! ;)

I've found and applied for another card with a fixed rate of 7.25% already. Obviously Capital One wants people like me to dump their cards, since they're not making any money off us.

Shar

"CapitalOne Informative

Increase in interest rates - Platinum Visa Credit Card

Posted By: stiney on 7/30/2007

Location: Detroit, MI

I have been with Capital One for about 10 yrs. I had an $11000 credit limit with a fixed 6.9% interest rate. Never been late, paid in full 98% of the time. Received letter stating my rate would increase to 15.9% variable with no explanation! Nothing has changed. When I asked why was told prime rate had risen...it hasn't tripled! Told them internet had a 9.9% rate fixed for 3 years. No explanation... asked to speak to a supervisor. After 15 minutes on hold...you guessed it...hung up on. I am furious but don't know what to do.

I guess loyalty and good credit means nothing to Capital One!"

 

[Tina]

Hi Shar,

I got the exact same notice a couple of days ago. I'm going to look for another card and transfer the balance and cancel the card. I also have never been late and I've had the card for years. grrrr....

 

[OCKHAM]

Hi Shar and Tina,

I agree with what you say. I also have one of those cards and am probably in the same boat. I ignore the mail, and pay the balances monthly unless I know the rate is set for the amount I use in borrowing.

A couple of tips that I've used over the years was to acquire more cards as back-up. Then, go through all the cards you have and determine the closing dates. These are the dates the company uses to stop the 30 day run and bill you. The closing dates are usually on the statement. The reason in knowing all your closing dates is important. You want to screw the credit card company out of as much money as you can, and one way to do that is to only make purchases 1 -3 days after closing. This way, you use their money for up to 45 days instead of the usual 30 or less depending on the purchase dates. I only use a credit card if I know the closing has just occurred and have done this for years. When you get the bill, your charge will not appear, it will appear on the second bill.

Capital one will just lose out because of people like you and me who will not use the card any further until the rate has been brought back down. One thing about having many cards is you will need to establish control over your spending habits. I also occasionally use the checks they send you in the mail, and if I borrow money through a credit card, it is almost always through the checks they send that have 0% interest. I hope you're getting some of those checks or at least low rates so if you need to pay a larger bill over a few months, you can do so for very little interest, or about 3% of the amount for a one time charge, and maybe a $1 a month for the period.

By using the checks they send you, and moving balances away from credit cards you have onto another, this creates competition between them for your business. This has been nice when you needed to keep the cash flow and pay larger bills like property insurance or something. I've noticed many of the cards I have are raising the rates, so I stop using them, but use other cards will lower rates, again this creates competition and that information may be available to them in some way. Who knows what they are really capable of tracking about us.

 

[Divide by Zero]

My low interest Merrill Lynch credit card (by MBNA) recently changed too. They said the only way I could keep my old rate would be if I had a balance, and wanted to pay it off while not using the card. I don't have a balance, but at least they gave people an option to pay off their cards at the lower older rate until using it again.

All I have to say is that I'm glad I don't have to buy things on credit. I feel sorry for the people that put necessary expenses on credit cards, such as auto repair bills, health bills, etc... ridiculous!

 

[Locksmith]

The debt industry is highly concentrated, particularly so with the CC companies and their brands (most of the banks and merchants who's name appears on the card). There are many attributes in common between the debt and pharmaceutical industries.

The CC companies have been gradually raising rates and fee charges for well over a year. Good luck in finding any with much lower rates. They also have been tightening the rules so that they can gotcha with one of their bevy of "fees."

The very best thing you can do, IMHO, is to work your way out of those balances as fast as you can. This is very hard to do if you have become accustomed to running balances, even if you are committed and disciplined. Here are some tips that I used a long, long time and have kept going for almost 3 decades:

If you have more that one card, get rid of the easiest to zero-out first and then close it in writing to the CC company.

Keep this process going until you end up with only one card, which should be planned to be the one you want to keep on using.

As you go through this process, start making a realistic budget. That takes time and it will always be changing. Make your own goals and be realistic with the amounts and you income. If you keep at this over time, eventually you will arrive at a livable one that uses no CC balances. But, even this one will change as time goes on and your financial life changes. Stay on top of it and don't give up if it is painful. Just keep going on knowing that you are working toward a much better financial life.

After zeroing out the last remaining CC, let it set idle for a couple of months so that there will be no more interest applied on new purchases when new cycle balances are paid in full. Be sure to confirm from the fine print, or save a headache and call their customer service to confirm.

Learn to live without charging for a while. In fact, learn to use the CC for only those purchases that are big or done with remote vendors and you don't want to write a check or use a MO. Use cash, preferably, for small purchases, and checks for the regular bills.

One trick I've used to keep in sync is when I make new purchase using the CC I also make an entry in my checkbook for that purchase just like I had written a check. Of course no check was actually written, so enter visa, mc, the debt carrier name, etc., for the check number. Now, when the cycle time comes collect all those outstanding purchases and enter the sum in the deposit column on the same checkbook row where you write the actual check to the CC company for the cycle balance. Make sure they are the same amount (the new check = the sum of the outstanding balances collected). I alway use the cycle MM/DD as my entry in the columns to indicate that these pseudo checks and deposits have cleared the bank - makes reconciliation time a lot easier. Spreadsheets or commercially sold money management systems make it even easier.

If a situation comes up where you have no choice but to run a trans-cycle balance and incur new interest charges, minimize the amount and try hard to reverse that situation as you are able to.

Get a free credit report and make sure all of the close cards do state CLOSED.

As you force yourself to budget for future purchases and use the CC for only those that you can, and intend to pay off at cycle time, you will become financially wiser and be keeping more of YOUR money. Learn to save for future purchases through budgeting. Get rid of all debt as fast as you comfortably can. It all incurs interest charges which are leaks in the container of your financial life.

But, don't let setbacks discourage you. Learn from them. It should be looked at as a lifetime process of financial management. And, please forgive me is this sounds austere or preachy; it is intended to help and meant from my heart.

 

[Tina]

Hi Shar and Tina,


A couple of tips that I've used over the years was to acquire more cards as back-up. Then, go through all the cards you have and determine the closing dates. These are the dates the company uses to stop the 30 day run and bill you. The closing dates are usually on the statement. The reason in knowing all your closing dates is important. You want to screw the credit card company out of as much money as you can, and one way to do that is to only make purchases 1 -3 days after closing. This way, you use their money for up to 45 days instead of the usual 30 or less depending on the purchase dates. I only use a credit card if I know the closing has just occurred and have done this for years. When you get the bill, your charge will not appear, it will appear on the second bill.

Ahhh! That's very good and thank you. I would have never thought about that since I'm not as money minded as I need to be.

 

[Peto]

Hi Locksmith,

That's very good advice. Credit card debt is another chain put on the ordinary by the Matrix, making their minds so occupied with staying afloat that they have no time and energy to think about waking up. I often shake my head reading about those who cannot get by the month without charging to their numerous cards (and cannot pay up all the balances at the end of the month.) Just imagine their horrors with the new high interest rates :o

 

[anart]

Hi Locksmith,

That's very good advice. Credit card debt is another chain put on the ordinary by the Matrix, making their minds so occupied with staying afloat that they have no time and energy to think about waking up. I often shake my head reading about those who cannot get by the month without charging to their numerous cards (and cannot pay up all the balances at the end of the month.) Just imagine their horrors with the new high interest rates :o

Well, as one of those who could not 'get by the month without charging', I think I should point out that there are those of us, due to illness or other factors that must turn to credit to survive for a time. That time is currently behind me, thank goodness, at this point in my life, but if one has always had enough funds to provide for oneself, then I can imagine it is difficult to understand why anyone would use credit. The fact of the matter is that a rising percentage of americans do utilize credit cards to meet basic 'needs' - and they will feel this crunch viscerally. I have not charged anything on a credit card for a year and a half or so, but I still have a balance that I work to pay off each month. Once I'm free of it (assuming nothing happens to prevent that) then I will not use a credit card again - assuming (again) that is is not necessary. I do hold a few, though, just in case a true emergency necessitates using them. However, there is no doubt at all that they are evil, evil things.

 

[Peto]

Well, as one of those who could not 'get by the month without charging', I think I should point out that there are those of us, due to illness or other factors that must turn to credit to survive for a time. That time is currently behind me, thank goodness, at this point in my life, but if one has always had enough funds to provide for oneself, then I can imagine it is difficult to understand why anyone would use credit. The fact of the matter is that a rising percentage of americans do utilize credit cards to meet basic 'needs' - and they will feel this crunch viscerally.

Hi Anart,

Thanks for the perspective. I agree that it is necessary to keep a card for occasional emergencies. What I referred to in my earlier post were those who have to constantly utilize credit cards to meet basic needs for a long time. It is obvious that in such cases, the debts will just grow and there's no way out of it. Of these people, there are many who got into such situation due to undisciplined spending (think of the consumer-driven US economy in the last few years) rather than genuine hardships. It is especially for those that credit cards and the ease and lure to use them are evil, evil things.

I should add that there were occasions that I had to use credit myself. However, I grew up with the value that debt of any kind is to be avoided as far as possible. So I guess I have a more critical view towards that.

 

[Nienna]

There are other reasons to use credit cards, too. I never had one until I became acquainted with the Cass sites. Yep! And the reason for the card is so I can buy books more conveniently. Among other things. And I don't use the card unless I already have the money for the purchase. Then, when I get the bill, I just pay the whole thing off.

I do realize that there are a lot of people who can't do this. And you never know when it might happen to me, too. This is just the way I have been handling it now.

And the bankers just seem to rub their hands with glee as more and more people become indebted to them. Evil in action.

 

[Mrs. Peel]

Hi Shar and Tina,

I hope you're getting some of those checks or at least low rates so if you need to pay a larger bill over a few months, you can do so for very little interest, or about 3% of the amount for a one time charge, and maybe a $1 a month for the period.

By using the checks they send you, and moving balances away from credit cards you have onto another, this creates competition between them for your business.

Hi,

Believe me, I am a master at squeezing pennies. ;) My last several big ticket items were paid for by opening a card with the company I bought from, they offered 0% for a year, during which time I paid the items off, then closed the account. The only debt I have is my mortgage and a small loan from my credit union (where I got a great rate cause of my credit score) for my car that I could pay off with my savings if I have to, but I don't want to deplete them. Just in case...

Oh, and that pesky Capital One card... It seemed if I charged right after the closing of the billing cycle, then make a payment of more than the minimum, or even make TWO payments in a cycle, I kind of stayed ahead of the interest charges for a while. Usually I don't carry a balance, but I recently replaced my old computer and charged a plane ticket so of course, NOW is the time Capital One decides to raise their rates. I've never used their checks, just torn them up.

I could open another 0% introductory card and shuffle the Capital One balance to it, but then I'd be looking for another one again after the intro rate ended, so I'm going to just open one with a low fixed rate and no balance transfer fees.

 

[Locksmith]

I just noticed this item in the subscription edition of Chapman's August 25th newsletter:

Capital One’s massive exposure to the weak mortgage market has forced them to institute massive increases in the rates it charges its credit card customers, even including A-rated customers. Capital One is among the largest credit card issuers in the country. When probed as to why they raised rates they refused to tell callers.

The problems are so bad that the bank will take an $860 million charge against earnings and shut down its Green Point mortgage operation. 1,900 employees are to be fired. Our advice is to cancel your Capital One credit card. Why should you have to pay for their greed and stupidity?

Perhaps this will help explain why this happened to even the best rated cardholders. It is also fairly commonly known that most CC companies have been tightening restrictions and planning/implementing rate increases for well over a year.

Also, I just came upon non-profit Consumer Action's website which has useful information, should you not already be aware of it. Here are a couple of relevant links:

_http://www.consumer-action.org/news/articles/2007_credit_card_survey/

Change of terms provisions at the top 10 credit card issuers --
_http://www.consumer-action.org/news/articles/2007_credit_card_survey/#Topic_1a

 

[dant]

As you know, the fine print says: "We reserve the right to change our policies". That in itself says EVERYTHING. Read the policies DAILY as if in every minute. Ya ever know when they will pull the rug out from under you. This phenomenon is happening just about everywhere.

 

[Ninas]

I also had to cancel my Capital One Card. They promised me a low rate with no yearly fee and started charging me $50 a year for simply having the card.
I tried to complain several times and asked them to keep the terms of our agreement but they denied my request even though, I said that I'd be taking my
business elsewhere. They didn't care..... Anyway I cancelled my card..... They're not worth the time and hassle.

 

[pete02]

The Cassiopaeans did say 666 stood for Visa I believe!

The whole credit system is a trap for sure. The disturbing thing is that the PTB is manipulating it to squeeze the rest of the life out of us. I recently had two credit cards raise their APRs and when I called them all they had to say was they were trying to be competitive in this economic time!! I thought to myself "Are they kidding me?!" The banks seem to be the ones taking all the stimulus money which is coming from our tax dollars and they have the nerve to tell me that?! The end result was I refused their new terms and remained at my initial APR. However the balance must be paid off by the expiration date on the card and my account will close permanently.

The thing I don't like is that everything seems to be judged on your credit rating anymore and they are manipulating that like crazy. I recently purchased a new car and guess what? When I took out further debt, it lowered my credit score hence raising my car insurance! Is that nuts or what? Also someone I know recently had a credit card lower his limit once again due to the economy. Now his balance isn't below half of his available credit limit, its actually above half so once again according to those terms, the credit card company can raise his APR because he is now considered more of a risk! And all because THEY created it!!

I've been trying to steer clear of opening any more credit card accounts because I believe I'll never get out of this trap if I don't and what if this raising the APR thing is only a plan by the PTB just to open more accounts and get us sucked further in? I know sometimes situations don't allow us to break free very easily but I think its an ongoing process and one that we just have to keep going at. fwiw.