A lot of the debates over bankruptcy and other policies have brought out arguments that credit card companies are themselves responsible for a great deal of default because they hand out credit indiscriminately and then try to use the legal system to bleed their cardholders dry.
I know someone who works for Capital One, which is one of the largest credit card issuers in the United States, and he said that Capital One’s policy is to target people with a history of bad credit and then offer them low-credit-limit cards in order to encourage responsible use of credit. A lot of people don’t like Capital One because their credit lines are small, but their policy, he said, is to offer only as much credit as they believe a card holder is able to handle.
And then there’s those commercials that show Capital One’s reasonable policies putting raiders and pillagers (i.e., other credit card companies) out of business.
So is Capital One being a responsible credit issuer here? Is this the kind of credit card company we’ve all been hoping for? What’s the Straight Dope?
Hmm…I have a CapOne card (which I do not use) and, I don’t know what you consider a big credit line, but they gave me $3000 in credit when I opened the account. The main gripe I have against Capital One is that they do not report your credit limit to the agencies, and this can have (and oftend does have) a negative affect on your FICO score if you’re the type of person who keeps a balance.
For example, let’s say Capital One was my only card. They give me $3000 in credit. I go out to the store, buy $200 worth of stuff, and keep a balance on it. Since Capital One does not report credit limits, the agencies generally use the highest balance kept on the card and use that in lieu. So, if this was my first use of the card, it looks to FICO that I’m using $200 of a $200 credit limit, IOW, I’ve just maxed out my card. FICO penalizes rather heavily for this.
When I first got my Captital One card, I made $1100 worth of purchases and paid off the balance next month. However, the credit agencies got their info before I made my monthly payment, and it looked to them like I had maxed out my card, and my score promptly dropped 20 points (I use a credit score monitoring system). Of course, it went back up ito normal n the next two months when FICO received more current info. But if you’re a consumer who’s making payments every month, it looks to FICO that you’re using almost all your available credit, rather than just 30% like in my case. This, in turn, makes it more difficult for you to get more competetive cards from other lenders.
Our experience: Mysterious charges kept showing up on the bill. Upon investigation, many of these companies appeared to be “related” to Capital One in some way. E.g., nearly identical addresses or phone numbers. So after a couple of months of calling to get the bogus charges removed, we cancelled it.
Then the real headaches began. We got a new, unasked for card. Our credit report would get “dinged” repeatedly. (Each credit request lowers your credit score.) Etc.
No amount of official letter writing appeared capable of stopping them.
Because of similar stories like this I have seen, Capital One’s ad campaign is now geared towards persuading people they will “protect” customers from these very practices. Okaaaay.
I hear all this bad, bad stuff about CapitalOne, at least pertaining to credit cards. I’m a CapitalOne customer due to their purchase of PeopleFirst (hassle-free auto loans – they sent out a blank check), and have had nothing but good luck with them. They even report the original loan balance as high balance, and were super about getting me my paperwork quickly for temporarily exporting the car, and I only get the average amount of junk mail from them.
On the other hand, I was a happy PeopleFirst customer. Anyone have an auto loan that originated with CapitalOne that’s got a vastly different experience? This is getting a bit outside GQ, but the factual answer on our differences does contribute toward what it is that CapitalOne does or does not do.
In the current situation, all credit card companies can be predatory.
Whenever possible, pay your entire balance every month.
Never, never, never pay just the minimum payment. It will take you forever to pay it off that way.
Never pay anything late. They can jack up your rates for that. It’s true. Check the fine print.
If you need to borrow serious money for a big purchase, check with a bank or credit union first. The credit card is literally legal loan-sharking. The only difference is that Joey the Blade may break your kneecaps, but MBNA will take everything you own.
I may be sarcastic, but I’m not kidding. I’m serious as a heart attack.
My wife and I went through customer service hell with a Capital One card trying to get fraudulent charges corrected, and get our credit reports cleaned up. Unending mistakes and unfulfilled promises from their reps led us to finally just give up, cancel the card, and endure the dirty tracks on our credit reports.
Waiting the few years for Cap One to drop off our reports has ended up being less painful than having to do the phone, fax, mail, repeat with their CS reps.
I interviewed for an IT job with a Capital One subsidiary once. They made it a point during the interview to talk about how Capital One mailings constitute almost 1% of the U.S. mail. Then they went on to describe their bleeding edge IT infrastruture that lets them analyze everyone in America a million different ways. I swear that the CIA probably begs them to play with their toys sometimes.
I believe it. I have their damn card and they still send me credit card access checks (HA! Like I’m ever going to use them!) two times a week. As if one day, I’m going to forget what the hell I’m doing and accidentally will cash the $2,500 check conveniently made out to my name by Capital One and pay their usurous cash advance interest rates.
Well I really like Capitol One. (and no I do not work for the company).
A few years ago I went bankrupt. Afterwards ----from having an A plus credit rating —I went to zip. NADA.
(A little bit of prequel here------- First thing my bankruptcy lawyer told me was to reopen a checking account (last was closed by the bank for lack of any funds at all and no prospective of ever having any funds) --------so as to keep proper records.
Went to 3 different banks. All were happy to have me until they made THAT phone call. Answer was “sorry we cannot open a checking account for you—some problem with your credit”
Finally lucked out------a very young lady made THAT phone call and said “no problemo” Never saw her again at the bank. Either she was a quardian angel-----or she was so incompetent they fired her that day.)
Anyways back to the story------after actually going bankrupt I realized I needed to reestablish credit.
All kinds of scams going on in that department. $79 annual fees after paying a couple hundred to take a “course” in credit management and abominable interest rates was the norm.
Then I got a solicitation from Capital One. $29 annual fee. Not exorbitant interest rate. Secured card of $100 deposit drawing 6% interest with a $500 limit. I jumped at it. So much different than all the other crap I had received.
Couple years later, they dropped the annual fee at my request. Dropped the interest rate also to being very competive with A-one credit users.
With Capital One to give me a start ----I was able fairly shortly after bankruptcy to attain a FICO in the 700’s and all the credit cards with no annual fee and low interest that I could want.
Somebody (or some corporation) needed to give me some slack to get started. Show a little trust to someone who had fallen on hard times.
Capital One was the only one that did. Everyone else just wanted to rip me off.
I will always be a loyal Capital One customer because of that.
This is a nitpick, but not all cards, or even all cards from major card issuers have a universal default clause. Half of your cards might do that, or all of them, or perhaps none of them. I’m guessing 2 out of 3 do nowadays.
The main problem I have heard from people in addition to the ridiculous not reporting your true credit limit is that they don’t tend to grow with people. As in with on time payments, etc. they won’t raise your credit limit as liberally as other credit card companies do. They are really just a stepping stone for people with bad credit or people with no credit. You get them until you can get something better and then you move on.
I am young (19) and a student, so I regularly get credit card offers. None of the offers I receive are ever as totally absurd as Capital One’s.
Being young, I don’t have a whole lot of credit. Luckily, my bank gave me a nice, shiny card when I opened up my college checking. Said shiny card has a $1000 limit, no annual charges, and it had 12 months of 0% interest (now the interest is 8 or 9%).
Anyway, Capital One is always offering me $5000 cards. . . with 35% interest rates and $200 a year fees. I shit you not. Perhaps they just, naturally assume that since I am young I wont know to read that pretty, row and column filled paper they jam in the back of the envelope.
Whatever the reason, it just saddens me a bit to realize that someone, somewhere is taking that horrible card offer and likely killing their credit in the process.
I’ve had a card with them for several years and I’ve never had a problem with them. I was only late on a payment once but they worked with me on that issue. In fact, they were rather nice about the whole thing.
You see, I get paid twice a month. Once on the 1st and again on the 15th. normally I’ll pay my credit cards and other bills with the check on the 15th. Well, my Capitol One card was due on the 17th of each month (or some time around there). This means I had one day for my check to clear and I HAD to remember to make my payment on the 16th. I would try to remember to pay it around the first of the month but always forgot because of the habit of sitting down and paying everything else in one shot.
The day I missed the payment was one month I forgot to pay on the 1st and when I remembered on the 16th the website was down and it wouldn’t take my payment. I called them the next day. They didn’t charge me a late fee, didn’t raise my rates and OFFERED to change my due date to a date that worked better for me. They took a payment over the phone and waved the fee they normally charged for that. The person I spoke with was very nice and was eager to help.
Right now I don’t use the card anymore. I have one company that auto charges a small amount to it every month - which I pay in full on the 16th. In fact, I’ve been meaning to close that account just because I don’t use it anymore. It’s only like a $1000 limit. I think the only reason I keep it is because I like having the $1000 credit off to the side if I need it for an emergency.
My wife has a card with them as well and she’s never had a problem
Some random thoughts up ahead, sorry for not making them cohesive:
Here’s my BBQ thread about Capital One. Their business tactics have proven to be for sub-prime scores.
Also, I had a friend who filed for bankruptcy 5 years ago. He’s been trying to repair his credit and has run into a snap with Cap1. The debt was discharged with the BK7 and Cap1 declared him dead when they did it. He’s been “working” with them for 3 months now trying to prove he’s not dead. Grr.
My new year’s resolution for '05 was to build my credit score into the upper 700s and by June it was near complete. Creditnet’s fora were wonderful assistants to the final steps (although, I didn’t see the Capital One thing til it was too late.)
Another website is WhoGaveMeCredit.com where folks input their credit scores,whether they were approved or not, what the credit limit they were given, etc. Of the top 3 evil credit card companies, Orchard Bank, First Premier, and Capital One.
I’ve sock-drawered my Capital One Visa card and went with Working Assets Visa through MBNA instead. Every charge I make, 10¢ goes to a progressive non-profit like Planned Parenthood and the ACLU.
If I were going to recommend a credit card based on all components, myUSAA Mastercard has been the best. Very good credit limits (as a matter of fact, they just upped my credit limit after 6 months automatically and without pulling a hard on my credit reports), unlimited free online payments, a long grace period, and high quality customer service.