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Capital One Buys HSBC Credit Card Business

This article was written by in Credit. 7 comments.

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.


Published or updated August 10, 2011.

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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 .

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{ 7 comments… read them below or add one }

avatar 1 wylerassociate

That’s an interesting acquisition by Capital One. HSBC has eliminated thousands of jobs and looking to get out of out of the US credit card market.

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avatar 2 Anonymous

I too used these type deals in the past. And I got bit the same way. As Dave Ramsey says “If you play with snakes, you’re going to get bit.”

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avatar 3 Anonymous

This is worrisome. Capitol One has ruined my financial life and credit worthiness. Sending bills then putting me in “deadbeat” status when I refused to pay. A collection agency from another state (never been out of CA.) phoned incessantly, then stopped that when I cut off my phone; then the flurry of bills. That collection has snowballed; ten years later – the bills still are coming. Nothing slows down these crooks for purchases in other states. Tonight this was on local TV news:
The devil is in my own back yard now.

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avatar 4 Anonymous

Interested in your comment about the collection activity of Capital One. The Federal Law and California State law has very rigid rules regarding collection activity. A company cannot call you incessantly and subject you to continuous harassment. They must first give you their name. the company they are calling on behalf of and the company’s location.You can then demand they cease attacking you with phone calls and state that any future communication will be in writing. They are bound to comply Given this I find their collection activity ends and one can come to a satisfactory conclusion re your account. Such activity is in violation of the Law.
Derek Messenger

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avatar 5 Anonymous

Cap One collections called several times a day about 15 years ago, so I changed my number. No calls for years. About 5 years later the collection calls returned. A radio talk show (Howard Clark) mentioned just answer DO NOT CALL. I did; and that worked for a while. I moved during rebuilding of my home a year and a half ago. The bills once again began appearing in my mailbox and I get 2 calls a day now. My telephone opens the front door so I can not change to another number easily. I have home services weekly since I am disabled and use a wheelchair; and to make things worse- I have had a speech impediment so if 3 words (DO NOT CALL) do not work; I am sunk. As inconvenient as it is – I just leave my answering machine on all the time. I filled out a lot of paperwork in the early 1990s, and in about a month another collection agency took over the same way as if I never sent anything. I thought that in 10 years the law made collecters cease; but I guess not. Interest for refusing to pay this imaginary $11,160.+ bill is $560.+ a month (bill came last week). Sure did ruin my financial life, but just a way of doing business! Someday I may have a chance of sending Cap. One a hefty bill. You never know!

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avatar 6 qixx

Based on my experience with Capital One and my experiences with HSBC this will be an improvement for those with HSBC cards. And my Capital One experiences have been almost all negative. I still have one HSBC card (i don’t use it anymore – but it is my second oldest card so i won’t close yet) so i’ll be watching this.

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avatar 7 Anonymous

I should have mentioned earlier that I’m a Capital One card holder. I have good stories and bad stories about them.

Bad story #1 – Typically, I pay my balance in full each month. A few years ago, I made a payment late. I just missed the deadline. Stupid on my part. I was charged a late fee, and interest. Since a lot floats on the account, the interest was more than a few dollars. Second month, I was also charged interest. On calling Cap One, they explained they did double-cycle billing. I complained, they backed it off. Moral of the story (see previous quote from Ramsey regarding playing with snakes and getting bit).

Bad story #2 – This year, same thing happened (see good story #2 below). Interest and late charge. I really need to automate my payments.

Good story #1 – I was making an online purchase from a company in China. I entered my expiration date incorrectly. Almost immediately, I received an email and a phone call asking me to call them regarding suspicious activity on my account. No links in the email, and I think no phone numbers. Instead they directed me to call the number on my card. I did, identified myself thru security and confirmed the charge. Not sue what the trigger was, but these guys are on frauid alert.

Good story #2 – Recent vacation meant a lot of charges in a resort town. Most were small, some into the $100 – $200 range. Return home to find TV is dead, go to electronics store and break down and buy the HD I’ve been salivating over. It’s a very large purchase, so card is initially denied. I call Cap One, identify myself, it’s way under my credit limit, so purchase is approved. Oh, I should have added, this was right after bad story #2 above, late payment. What flagged the problem? Not sure, but it was cleared up quickly.

Overall comment – I think Cap One does a good job of fraud management. They’ve always treated me well. But, like all credit card companies, they’re in business to make money. If they can find a way to make a buck off of you, they will. My weapon against this is my willingness to move. I’m loyal as long as they treat me fairly.

My one desire is to have two separate cards with separate numbers rolled into one account. That way if my wife’s card gets stolen (has happened once), I can continue to use my card. They say I need two separate accounts.

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