Capital One

[water1111]

I am having the same problem as one of the earlier post. Last month, I paid off my capital one bill and so I just received a bill in the mail that I owed an annual fee of $29 ALSO........I had a finance charge added on to my balance...............So I am confused.......Last month, I paid off the balance so why would I have a finance charge if there is no balance.
What should I do.................should I close my account since capital one is such a terrible credit card to have(in my opinion) but I don't want my credit score to go down because I have been working so hard to make it better.......No it is not my oldest CC....

[b4freedom]

Call them and request a refund of your annual $29 fee. If they don't give it to you. Close the account. Seriously, sometimes they'll wave it for a year.

Are you buying a house anytime soon or making any other big purchase. If not, don't worry about your credit score. $29 a year isn't worth a short term 20 point drop in your score.

[PRICEPLUS]

So much for the "what's in your wallet", hoopla!

[MarianneJ]

Nothing in the OP's post points to anything underhanded by CapOne at all. They chose a CC with an annual fee, now the time has come to pay it - nothing underhanded there. As far as the finance charge, these accrue on a daily basis, so if they did not pay off their balance before the last day of the cycle they will owe interest on the balance that was paid off - again nothing underhanded about that either.

It is ridiculous to say that a CC is bad because you do not read or understand the terms of that card. There is plenty of wrongdoing and manipulative, underhanded practices occurring on a daily basis in CC land, there is no reason to make everyday, written-in-your-agreement stuff into reasons to hate a company. Of course, there may be other reasons for the OP to state that CapitalOne is a "terrible credit card", but nothing in the original post sounds the least bit evil to me.

[neatdesign]

As a former Capital One call center supervisor, I think I can answer your questions.

First, the annual fee. If your account terms include an annual fee, then you will automatically get charged that annual fee on the anniversary of the month you opened your account. Having a zero balance is irrelevant. If your account is open, then you will get the annual fee. The only way to avoid the annual fee is to either close your account, or to have them waive it. Bear in mind that they will rarely waive it permanently. More likely they will waive it for one year, or perhaps do a half-waiver (in your case, $14.50). If your account is still open the next year, though, the membership fee will be charged again.

Next the finance charges. It's called residual interest. This is a little difficult for many people to understand and even trickier to explain, but I will do my best.

Let's say that your billing cycle is the 2nd of one month to the 1st of the following month. You have an APR of 9.99%. Capital One calculates your monthly finance charges based on your Average Daily Balance.

On January 2nd, you start your January billing cycle with a $1500 balance carried over from the previous month. On January 12th, you paid your account off in full. You didn't make any other charges after paying it off, and your balance was still zero on February 1st, the day your statement was generated.

Common sense tells you that since you paid in full on January 12th and didn't carry over a balance into the February billing cycle, you shouldn't get finance charges, right? This is where your Average Daily Balance comes in.

Remember that while your balance was zero on last day of your January billing cycle, you had a carried-over balance of $1500 for each of the first 10 days of that billing cycle. Those 10 days were NOT interest-free. The average amount of borrowed credit over the entire 30-day period is your Average Daily Balance, and it is this amount that is used to calculate your finance charges.

To figure your Average Daily Balance, you would add up the balance for each day of the 30-day billing cycle, then divide it by 30:

January 2nd-12th = $1500/day = $15000
January 13th-February 1st = $0/day = $0
Average Daily Balance = $15000 ÷ 30 = $500/day

If your APR is 9.99%, you can calculate how must the monthly finance charge would be by doing this:

9.99 ÷ 1200 = 0.00832 x $500 = $4.16 monthly finance charge (residual interest)

(This calculation works for any APR -- just replace the 9.99 with whatever APR you're working with and go from there.)

Now, once you've paid THIS in full ($504.16), assuming the payment is on time and NO other charges are made to the account, then the February bill will have NO finance charges.

Bottom line is: With Capital One, you have to pay your balance in full for TWO CONSECUTIVE MONTHS to avoid finance charges (residual interest).

Hope that helps.

~ Jenney

[neatdesign]

Originally Posted by MarianneJ

It is ridiculous to say that a CC is bad because you do not read or understand the terms of that card. There is plenty of wrongdoing and manipulative, underhanded practices occurring on a daily basis in CC land, there is no reason to make everyday, written-in-your-agreement stuff into reasons to hate a company. Of course, there may be other reasons for the OP to state that CapitalOne is a "terrible credit card", but nothing in the original post sounds the least bit evil to me.

I agree with you in theory, especially since I've been on both sides of the credit card industry as a consumer and as an industry employee. Technically speaking, Capital One did nothing wrong here. However, terms & conditions are written with the avoidance of liability as the first priority. Educating the customer about how to manage their credit card accounts is NOT a priority.

Even highly-educated people have an extremely difficult time understanding credit card terms & conditions. When I used to get calls from customers complaining about the residual interest on their bills, 99% of the time they were NOT people with the $300 and $500 limits with poor credit, but the people with the $30,000 and $50,000 limits who have great credit and (nearly) always pay their balances in full each month. If people with master's degrees and PhD's can't understand it, how can someone with less education?

Ultimately I agree that it is up to the consumer to understand the terms & conditions and abide by them, and not get upset when the credit card company also abides by them. However, at the same time the credit card companies make it extremely difficult for their own customers to do that.

~ Jenney

[water1111]

Thank you for all your responses.

Yes, I do agree it the consumers responsibility to know the CC's terms and conditions but I think CC's such as Cap 1 solicit those costumers with the worse credit and most desperate need for credit.

Also, one underhanded thing that Cap 1 does do and not discussed in original post is they hold your payment back so you get late charges. I don't know how many times this happened to me. I would keep moving back the date until finally I would make my payment literally 3 weeks before it was due so it wouldn't be late. However, a lot of people esp. people strapped with money problems can't do that so they will make their payments up to the due date and most times it will be docked a late fee.

[kv968]

If you think they're holding your payment back in order for you to get a late charge you should use the online payment option. My checking account is linked to their site and all I do is initiate payment from their site. It's posted the next business day.

[Bookie]

I assume everyone saw the article on Capital One in BusinessWeek?

Here is the link if you missed it.

Seems an appropriate and timely addition to this thread.



.

[PRICEPLUS]

Why am I not surprised by this article!

I don't know but all I see in that article is stupid people and Cap One's ability to make money from them.

There are some questions about their possible "massaging" of the finances by manipulating the appearance of charge offs and revenue but that doesn't have anything to do with people accepting a credit card offer they don't need.

My stance on credit cards and the industry is pretty clear, I've even abandoned my short lived experiment with a reward card (not worth it to me) but I don't see anything here that anyone should be surprised about.

If they are found to be doing something illegal and / or unethical then fine, hang 'em out to dry, but I'm not sure if making an offer to someone (as opposed to actually opening the account in their name without their knowledge) qualifies.

One thing the article does make me consider is you can be fairly certain if regulation ever does "crack down" on the fee circus at play in the industry, you can more than likely kiss those low fixed rate cards and rewards programs goodbye for all but those with the best credit scores. Probably wouldn't be surprised to see grace periods dwindle even further in that situation either. They'll make their money one way or another.

[poundwise]

I usually defend Capital One (*gasp, did I just say that?*) because so many times people's complaints against them are either (1) somewhat bogus, (2) a result of their own mismanagement, or (3) something that is true of all credit card issuers, not specific to Capital One.

In some ways, I think Capital One is one of the best among a bad crop of issuer choices. And, I agree with the earlier poster that it seems the 'annual fee' surprised the OP due to their simply being unaware of the terms of their card.

However, I wanted to point out something that happened to us with Capital One that illustrates the error in thinking that if you just manage your accounts well, you'll be fine. You had better watch carefully. It is more than reasonable attention you need, you need real due diligence, when dealing with Capital One or any other credit card company. Here's an illustration as to why:

My wife applied for a Capital One card online. The card was a no annual fee, standard (not rewards) card. She was approved. The card arrived in the mail a short time afterwards. Remember, the application clearly stated that there was no annual fee. Still, we thought it wise to inspect all the terms before activating the card. We found the terms to be just as the application had represented them. The limit was printed in bold, black print in the upper right corner of the tri-fold paper that had the card attached to it. Just below the limit, in similar bold, black print was printed, "No annual fee."

I was not content. Due diligence, remember? I had her call Capital One. She said that she wanted to clarify some things. She asked what the interest rate was. Good answer. She asked about the limit. Also, good. Then she asked, just to be sure, about the annual fee. Bad answer. We were told that the card had an annual membership fee. She asked further about it but to no avail. So she gave permission for me to speak to the rep. I pointed out that the application said that there was no annual fee (and that I had saved the application screens as PDF files during the online process). I then read the statements that were printed on the paper that came with the card including the bold, black, "No annual fee." I suggested that I could fax this if needed but that we were not going to pay an annual fee on this card.

I was bumped up to a supervisor who tried to explain by saying the she was sorry for the misunderstanding. I cut her off. This was not a misunderstanding, this was misrepresentation. One that I had in print. She put me on hold. Then she returned to the line and told me that she had waived the fee.

Hold on. More due diligence.

"For good? Or just for one year?"

For good.

"This card will not have an annual fee, period. Correct?"

"That's right."

Ok.

A couple of weeks later we received a letter from Capital One. It was a form letter that said that even though your card may have arrived with a note that said "No annual fee" that the card account does, in fact, have an annual membership fee.

So, we called again.

Ours was permanently waived. (We'll see about that.) So this didn't matter. It was just them telling everyone that had the same "misunderstanding" that there would be a fee.

So, ultimately, we kept the card. We pay our balance each month. We also keep our eyes open.

My point is, this is what you have be willing to do with each and every credit card account you have.

Yes, in some instances, people need to quit being ignorant, foolish, (not referring to the OP, just in general) and/or gullible and take care of their personal business properly.

However, that does not completely, adequately deal with the matter.

You must also be aware that these companies... ALL OF THEM... engage in practices designed to 'catch' you unaware. Change of terms in small print as a little folded brochure in your billing statement. An adjustment to your fees or interest. Delaying posting your payment. Offering you a new program (which, no doubt, changes terms at the same time.)

So I would suggest that there are two extremes. One says that you should avoid all credit cards at all times at all costs. The other which says that is complete nonsense and credit cards are fine if managed properly.

I would say that for some people, the first position is best. For my parents for instance. That's what they need to do.

For others, the second position is correct, however, only if 'proper management' includes skepticism, suspicion, and due diligence.

[vsjhoc]

My only complaint that is specific to Cap One is that they do not report your credit limit to the credit bureaus, while most other bank cards do. This lowers your FICO score because it appears that you have 100% utilization for your Cap One card, regardless of the amount of your balance.

I've heard that if you call and ask them to report your limit, they refuse. My understanding is that they do it for "competitive" reasons -- if they can depress the scores of their own cardholders, then those customers will be less likely to be able to get other (non-Cap One) cards. Or something like that.

[neatdesign]

Originally Posted by water1111

Also, one underhanded thing that Cap 1 does do and not discussed in original post is they hold your payment back so you get late charges.

I know nobody believes me when I say this, but CapOne DOES NOT hold onto payments. They don't -- they can't, because it's a violation of federal law and can get them in BIG trouble, get huge fines, etc.

I don't know why people have so many problems with their mailed payments, I really don't. But having worked in payment investigations my strong feeling is that many customers (not necessarily you, of course) don't follow "proper procedure" when mailing their payments in, which causes delays in payment processing.

For instance, people will send in multiple checks for multiple accounts in one envelope, but include only the payment stub for one of the accounts. Or they'll send a check with no payment stub and only the last four digits of their account number written on the check. Or they'll send a check via express mail to the regular payment address (a PO Box) instead of the express payment mailing address. Or they'll just send their regular payment to the wrong address altogether.

But, there is a bright side: There are other ways to make your payment. Pay online for free, or pay by phone for a fee. Or pay via Western Union.

~ Jenney

[neatdesign]

Originally Posted by vsjhoc

I've heard that if you call and ask them to report your limit, they refuse. My understanding is that they do it for "competitive" reasons -- if they can depress the scores of their own cardholders, then those customers will be less likely to be able to get other (non-Cap One) cards. Or something like that.

This is true. They aren't legally required to report it, so they don't.

~ Jenney

[poundwise]

Originally Posted by vsjhoc

My only complaint that is specific to Cap One is that they do not report your credit limit to the credit bureaus, while most other bank cards do. This lowers your FICO score because it appears that you have 100% utilization for your Cap One card, regardless of the amount of your balance.

Yes, this is true. However, there is a work-around.

MSN Money article

And, while it is not ideal, to say the least, to have a Capital One card in terms of their reporting your credit usage, etc. it is also not necessarily a big deal, especially if you (a) follow the advice in the above article and (b) hold other cards/have other credit accounts, etc. (Not to mention the fact that if your Capital One card is one of you older accounts then closing it could hurt your score as well.)

Still, you are correct; this is clearly a negative.

I've never actually seen the impact of that particular practice (not reporting the credit limit).

Cap One is the only card I have, I'm a renter with no car payment so it's also the only debt obligation I have month to month yet my score has not been hurt at all.

[vsjhoc]

Originally Posted by rexdart

I've never actually seen the impact of that particular practice (not reporting the credit limit).

Cap One is the only card I have, I'm a renter with no car payment so it's also the only debt obligation I have month to month yet my score has not been hurt at all.

I don't know what your credit score is, but it's possible it would be higher if you had a card that reported your true limit.

[poundwise]

Originally Posted by vsjhoc

I don't know what your credit score is, but it's possible it would be higher if you had a card that reported your true limit.

Not necessarily though. (I know, you said "possible" and yes, it is possible.)

There is also the point that seems to need to be constantly made that a higher score is not necessarily better in any practical way. That is, if you have a high score, there is no real reason to try to actively make it higher.

"There is no reason to go from 775 to 850, because you're still going to get the same rate," says Linda Sherry, spokeswoman for Consumer Action, a Washington, D.C.-based advocacy group."

Cf. Bankrate article

That figure in the 'for instance' given by Ms Sherry is actually quite high. Many mortgage lenders provide information on how you are rated (graded) by underwriters for approval for a home loan and this information generally lists a top tier rate tied to a score of 670+. Insurance uses scores in still broader ranged tiers. Certainly, if one has a score of 670, 720, etc. there is, again, no real reason to take active steps to raise your score.

Originally Posted by vsjhoc

I don't know what your credit score is, but it's possible it would be higher if you had a card that reported your true limit.

815 on the most recent pull, I'd just assume not mess with it.