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Capital One Reportedly Raised Interest Rates Across the Board

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Consumerist reports that readers have been writing in today with complaints about Capital One credit cards. They’ve increased their interest rates (APRs) on purchases across the board, affecting a large pool of customers.

Here’s a strategy to remedy this situation if it affected you.

If you have another credit card with a low interest rate, transfer your balance out of the Capital One card.

Call Capital One’s customer service and let them know that you have transferred your balance out due to the abrupt interest rate adjustment. Tell them you’ll transfer the balance back if they provide you a promotional rate for balance transfers. You could also try to negotiate to get your original rate for balance transfers and purchases if you cannot get the promotional rate.

If they provide a promotional rate for the transfer but leave the purchase rate high, do not purchase anything on the card again, and work to pay off the original balance as quickly as possible.

This strategy is not guaranteed to work, so your mileage may vary.

The best solution is to avoid interest charges in the first place by paying off your entire balance every month, no matter what brand card you use. As sub-prime mortgages hit the fan and more people take advantage of the good points of credit cards, the more ways they will find to screw their customers.

Also, pay attention to the mailings from the credit card companies no matter how unassuming they look. If you always read your notifications, you won’t get blindsided by seeing the interest rate change on your statements, when it’s already too late.

Updated February 6, 2012 and originally published August 2, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 12 comments… read them below or add one }

avatar the Wizard

A co-worker of mine got a letter on this from Captial One yesterday.

They raised his rate from a fixed 8.99% to a variable rate of Prime + 7.5% or something, effectively doubling his rate on purchases. He called and spoke with a CSR and supervisor. He said the supervisor sounded a litte flustered and indicated he had been getting a lot of calls on this issue.

In the end he got the rate back down to 7.99% which he was happy with. He has had the card for 4 or 5 years, and did’t really want to get a new card even for 0% on purchases.

He had a sweet offer in the same mail in his wifes name for a 0% transfer for 15 months on a Chase Platinum card with a $99 BT fee cap. I couldn’t figure out any way to use this offer myself as it was a targeted invite. Any ideas?

Cheers

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avatar Tim

the transfer to another lower cc only works if you do your own calculations. you don’t want to be paying a high bt fee that’s for sure.

seems that capitol one can’t keep charging below prime for a long time, so the rate increases seem like a natural progression. that just goes to show you that you need to read your monthly statements for any kinds of changes, and second that cc companies can change terms any time.

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avatar w Myers

I got the letter from Capital One. There are two important aspects to this APR issue.

First is that basically the APR is doubling. Second is that it is becoming variable. This means as the mortgage business continues to head south your variable rate could hit the roof.

I canceled my card by the way. I can see robbery when it is staring me in the face.

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avatar S_Ever

I also got the infamous letter a few days ago, raising my rate to 15.99% I was a little suprised they did this as I always pay on time and have a $3,000 balance on the card. I immediately sent a letter to the customer service dept. and asked them to drop my rate back down to 9.9% or I would cancel the card and never do business with their company again. I’m looking at a 0% into offer card until Oct. ’08 with 9.9% after that.
Good bye Capital One

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avatar sjj

I had an interest rate of 5.33% and got a letter informing me of a rate increase to 14.99%. I called them up and asked why such a big increase. They said they were doing it across the board when your rates come up for renewal. I questioned why they would do this to good customers with excellent credit. They said it was due to the economy. I wonder what they think the impact of rasing rates so drastically will be to a weak economy. Anyway you can call and close your account and you can pay off the balance at your lower rate. Also I went to creditcards.com and signed up for a card with zero interest for 12 months and prime + 4.99 thereafter. (Would be 8% currently). Oh well, I guess they are willing to lose good customers. I hope this greedy company doesn’t go back for more bailout money.

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avatar SallieB

I got the Capital One letter today. Our interest rate went to variable with a current rate of 15.99% from a longtime rate of 6.90%. Our payment is always more than the minimum and always on time. Fortunately at the moment our entire balance is on a different card that is 0% for a number of months. I can’t foresee transferring it back to Capital One, a company that I previously had a great deal of respect for and would have recommended to others.

It seems really strange to raise credit card rates when interest rates have dropped. I think it is also unfair to ask credit card users to make up for problems in the mortgage market. We are no longer using credit cards but still have a sizable balance to get rid of.

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avatar capitaloneROBBERY

I got a letter from capitalone several days ago. They stated that they changing my rate for 8.9% to 29.98%.
The letter informed me that if i don’t agree with the terms, i should pay my balance and close my account.
Well, i will transfer the $500 balance i have with them to another card.
Since they are robbing me, i will avoid all business i have with them and so long for the last 5 years!!
What a way to loose customers!!

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avatar Ed in OCNJ

I got nailed by Capital One too. This is the financial equivalent of taking it in both ends. There are numerous websites with similar tales of woe and, for whatever good it will do, I have written to my Congressman, Frank LoBiondo, 2nd Dist, NJ as follows:

Mr. LoBiondo –

Please refer to the following website regarding recent actions taken by Capital One Bank in announcing a unitlateral decision on its part to significantly raise the interest rates on the credit card accounts of its customers after accepting signififant TARP funding.

http://www.consumeraffairs.com/credit_cards/capital_one.htm

My notice from Capital One advised me that “Due to extraordinary changes in the economic environment”, as of April 17, 2009 my interest rate will increase from the current rate of 5.06% APR to 13.9% (a 174% increase). This is being done despite the fact that I have never been late, have never exceeded my credit limit, always pay more than the minimum due and have a credit score in the upper 700′s.

I certainly don’t expect you to spend your valuable time addressing my specific dilemma as I am just one person directly affected by this action by Capital One. However, as evidenced by the information at the link provided, there are surely countless other constituents of yours similarly and adversely impacted by this action and possibly similar actions by other credit card issuers. On behalf of all of them, and myself, I would respectfully urge you to have Congress assess the justice in a situation whereby citizens, as consumers, are unilaterally and without recourse, mandated by a financial instution to pay them substantially more while, concurrently, that same financial institution receives, and gladly accepts, 3.5 billion dollars in relief from those same citizens as taxpayers.

Unfortunately, “we the people” do not enjoy the ability “due to extraordinary changes in the economic environment” to make self-serving, unilateral decisions that solely benefit us.

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avatar TProphet

Yeah, same thing here. I have spotless credit, have never missed a payment to anyone on anything ever, and I typically pay off the Capital One card every month when I use it. I like that they absorb the foreign transaction fee from VISA, which is why I keep and use this card. Some time ago they converted it to a “rewards” card, so I get a 1% rebate on my purchases as well.

However, my 7.99% fixed rate is going to 16.49% variable. If you call 1-800-889-9939 you can talk to an “account specialist,” who may or may not be able to fix this. I’m going to talk to them tomorrow. Every few years, Capital One tries to pull a fast one like this, and usually backs down when I call them on it. If they don’t back down this time, I’ll draw down my full $10,000 credit line as cash and close the account (so I can pay it off under the existing terms). 7.99% isn’t a bad rate for an used car auto loan right now, and I plan to buy a van anyway. :)

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avatar Jennifer Martin

We just got this letter today: our interest rate is going up to 19.8% as of October 2009! We our taking our cancel card option and transferring what we can to a lower card.

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avatar Dell

There’s at least one lawsuit on this

Lawsuit claims that Capital One engages in unfair and bad faith business practices with respect to its unilateral increases in the interest rates charged to consumer credit card accounts.

Atlanta, Ga. (PRWEB) August 14, 2009 — Atlanta attorney E. Adam Webb has filed a class action lawsuit against Capital One Bank alleging that Capital One has operated in bad faith by unilaterally increasing the interest rates on consumer credit card accounts. Capital One has raised rates even for consumers who have always maintained their good standing by satisfying all account requirements, such as making all required payments and not exceeding credit limits. Furthermore, Capital One has taken such action even against those whose credit scores and general creditworthiness have not declined. The suit claims that Capital One, which is headquartered in McLean, Virginia, has engaged in improper and unfair practices in order to increase the revenue it generates via the interest rates imposed on consumer credit card accounts. The case, styled Lemond v. Capital One Bank (USA), N.A., is pending in the United States District Court for the Northern District of Georgia and has been assigned Case Number 1:09-CV-01582-RWS.

According to the suit, Capital One raised the interest rates associated with credit card accounts by over nine percent even though accounts were in good standing and had been at all relevant times. Although Capital One did not purport to impose these new higher rates on balances accrued prior to its notice to consumers, the effect is the same because of the Bank’s practice of crediting all payments to the portion of the account balance with the lowest interest rate. In addition, the suit alleges that Capital One’s offer that customers could reject this interest rate increase by closing their credit card accounts is inadequate because, as Capital One is well aware, closing a credit line has a negative impact on a consumer’s credit score. A lower credit score can cost a consumer thousands of dollars over the term of a home mortgage or other loan. As a result, customers have been forced to accept Capital One’s unilateral rate increases.

The Plaintiffs allege that Capital One is liable for all damages that have resulted from its bad faith and improper conduct, to include the differential in interest payments paid by the class members to Capital One.

If you wish to discuss this action or have any questions concerning this press release, please contact E. Adam Webb., Esq. by e-mail at contact(at)webbllc(dot)com or by calling (770) 444-9325.

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avatar Chi ogbo

Capital one hiked my credit card interest from 2% to 23%. When I challenged it, they agreed in writing to drop it, but never fulfilled the agreement . Instead they hired a lawyer who sued me and case is pending at Clayton courts. I need a lawyer file a case against capital one for deception, damages, and unfair practice. Please help!!

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