Recently, Capital One announced they would purchase ING Direct, and from the feedback I’ve seen, most ING Direct customers are not to happy about this arrangement, primarily due to their experiences with Capital One credit cards. While I’m reserving my judgment until later because credit card operations are usually run by different management than banking operations, many ING Direct depositors are ready to abandon the ship.
Capital One is now in the process of acquiring the domestic credit card business operated by HSBC. They’ll be paying $32.7 billion to acquire these customers, or $2.6 more than the value of the outstanding loans.
The deal includes HSBC’s store branded cards, not HSBC Bank USA credit cards. Many years ago, I had a run-in with HSBC’s private-label Best Buy credit card. The credit card issuer did not send statements consistently, and some months I didn’t receive statements at all. This was before I had my finances organized and while I was spending more money to commute to my non-profit than I was earning by working. I needed a new computer at the time. Mine was so old it hardly worked for web design, which I was trying to do on the side to earn more money because working 80 hours a week at the non-profit was not paying off. My roommate was not happy I was using his computer, so I had to do something.
I took advantage of a 0% APR deal for a Best Buy credit card, but the infrequent statements made paying back the loan a mess. I almost lost my 0% APR status at the very end. When my last payment was due, HSBC charged me back interest for the entire nine month period at a very high APR. I was able to talk the customer service representative out of it, but I was not happy with the idea that statements would arrive at any time during the month, leaving me just a few days to get a check in the mail, if the statements arrived at all.
The blame is my own; I should have been more diligent with my finances to make it less likely I’d fall into a trap like this. This experienced helped me learn that I needed to make some changes with the way I was handling money.
Since then, I’ve avoided these types of credit cards, but Capital One sees the value from a business perspective. They must generate ample profit for HSBC, particularly if more borrowers fall into the traps I fell into. While the Credit CARD Act and the resulting regulation have stopped some of the more consumer-unfriendly practices, store brand cards are designed to take advantage of customers vulnerable at the point of sale.