Capital One Sucks Slightly Less Now
After mentioning earlier this week that Capital One has been arbitrarily raising rates on their credit card customers, it’s only fair to report on one of their positive moves. But first, a bit of background….
Capital One has previously not reported credit limits to the credit bureaus, providing them instead with information only on actual balances. I know what you’re thinking — who cares? I pay my credit cards on time so my credit score is just fine, thank you. Well, you actually should care…
This is a decidedly bad thing for consumers in that credit utilization is an important component of your FICO credit score and, in the absence of information on credit limits, the scoring system will substitute your highest balance in place of your credit limit.
As a simple example, let’s assume that you have a credit card with a $1000 limit and a $450 balance. That works out to a utilization of 45% ($450/$1000 * 100%). However, if you card issuer doesn’t report the limit, and if your previous high balance was $500, then your utilization will appear to be much higher at 90% (i.e., $450/$500 * 100%). This higher utilization makes it look like you’re close to the end of your rope, such that you’re perceived as a bigger risk, causing your credit score to drop. Since utilization accounts for 30% of your credit score, and since your credit score influences the interest rates that you are eligible for, this can be turn out to be rather expensive.
So… I was pleased to read that Capital One recently stopped this ridiculous practice, and is now reporting credit limits. According to an article in the Seattle Times, this change of heart will boost the FICO scores of some of their 50 million customers by as much as 40 to 80 points.
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I don’t regularly use my Capital One card, but it has one valuable feature: “No fees on purchases made outside of the United States”. My Visa charges several bucks for each transaction: When we travel through Canada, using this card for all our purchases saves us $50-$100.
Comment by dave — Aug 10th 2007 @ 9:04 amThe credit limit thing might now seem like a huge problem to most, but they are hurting everyone by not reporting the limits. The more limit you have, usually the better your score will be, if you’re not maxing it out, of course. I very happy to hear that Cap One finally came to their senses.
Comment by Joe Fier — Aug 10th 2007 @ 12:38 pmGood to hear that…now if I can get them to stop sending me access checks every 3 days even though I have opted out, called them, removed myself from mailing lists, etc…
Comment by David — Aug 10th 2007 @ 5:34 pmI know everyone talks about how valuable Capital One’s card is for purchases outside of US. However, they have the worst conversion rates to begin with so why not get some cash and use that instead of your credit card? You don’t get the reward points obviously but it should still be better than using the credit card.
Comment by MoneyNing — Aug 10th 2007 @ 7:42 pmMoneyNing - Are you sure about that? I’ve used Capital One while traveling and they charge the interbank rate, which is the rate that banks charge each other and is usually the best rate available. They even waived the usually 1% MC/Visa surcharge. On top of that, I got 1% cash back.
I still like to use cash at times since it’s better to haggle with
Comment by Jonathan — Aug 11th 2007 @ 5:52 amThe obvious solution to the problem would be to change up to your credit limit and then immediately pay it down so that your credit report shows a max balance of $1000 but a current balance of $450.
[sarcasm]It shouldn’t be difficult for most people to charge up to the limit.[/sarcasm]
Comment by MITBeta — Aug 11th 2007 @ 9:02 amSo, Capital One is finally changing this policy—is this reason to celebrate? For many years, consumers having been paying the price for Capital One’s aggressive marketing and consumer index models. I don’t understand how anyone could trust a company that intentionally brought harm to their card holders.
Maybe I am a skeptic, but I truly believe that IF Capital One is changing this policy, they have another one up their sleeve that is just as insidious.
We as consumers have a choice. Why would we CHOOSE to remain loyal to a company that has intentionally tried to screw us over?
Think about it…
Comment by Paul — Sep 21st 2007 @ 7:03 pmHow often does capital one raise credit limits?
Comment by new capital one user — Oct 3rd 2007 @ 10:45 amI got my first Capital One about 5 mo’s ago..and the last statement I recieved they raised my limit $200.
do they do this every few months..and can I opt to not have my limit raised?
Stay Away from CapitalOne
I’ve just canceled my card. The reasons, in order of importance are:
1. Customer Service (or lack thereoff), rude, lack of cummunication with me and with
other agents, transfer from one to the other w/o passing on or recording any information
about the call, etc.
2. Utter chaos in security verification system and approval of charges from online
purchasing.
I had a card from CapitalOne which was fairly new, hardly used, but for some reason the
last digit of my security code was partially wiped off the card. I attempted to make an
online purchase, and gave the wrong security code thinking I knew the number, which
turned out to be wrong. The website replied that the charges were declined. I looked at
the order and noticed an error in my billing address. Thinking this was the issue, I
corrected it and tried again–same reply. I then thought maybe it was a browser issue
(this was probably the stupid point on my part–don’t try 3 times…) so I tried again
from Explorer with the same result.
I quickly called CapitalOne assuming there was a problem with my card. They assured me
that all three charges were approved! They canceled one of the three, but then said “I’m
not sure I should have canceled the charge” and told me I need to contact the merchant,
but if there is any funny business I should call the fraud department. Note that this
whole time I had no idea I was using the wrong number because when I told the agent that
I wasn’t sure about he security code she assured me that it was correct because the
charges were approved.
The next morning I called the merchant, who assured me that there was no order because
the card was declined 3 times. I called back C1 and was assured that was not the case. I
got both the merchant and the fraud department on the phone together, the merchant
insisted that the card was declined 3 times, C1 insisted that on their end it was
approved, and that it must be a glitch with the merchants bank. The merchant assured me
there was no order, and that if I wanted to make the purchase I should call back and try
it on the phone. After the merchant hung up, the conversation with the fraud department
made me think that maybe the merchant was fishy. C1 assured me there would be no charges
(they deleted the charges). Of course that later turned out also not to be the case.
The next week I figured I would try again with a different purchase, different website,
same story. I called the merchant, was assured it was declined, and they told me that it
was the code again. I called C1 and said there was a problem with the code, told them the
code and they told me it was incorrect. Now I knew. However, they assured me that all the
charges were still there (previous ones as well) even though I know there were no order,
and they couldn’t cancel the charges.
This went on and on, hours on the phone, being transfered from one to another, being hung
up on, given ‘technical’ explainations etc, but nobody actually trying to help resolve my
issues — they just wanted to ask me endless ’security’ questions, ask me repeatedly to
‘verify’ the charges which I continued to tell them were all in error, over and over and
over. I spent hours on the phone.
I found myself wondering how this works. Let’s say someone got my credit card number from
a purchase w/o the security code — evidently the charges would be accepted? Sound secure
to you? And the flip side — I’m getting charged for things I can’t get because the
merchant is told it’s declined.
blah blah blah. Find yourself a card that can actually talk sense, keep track of the
issues, take notes, talk to each other, and keep your card actually secure. CapitalOne is
not that card. Incompetence and chaos is the driver there.
–H
Comment by H — Feb 2nd 2008 @ 2:47 pmI had a Capital One Visa account for years. In recent months there was fraudulent activity which they resolved promptly and issued another card. Two months later there was fraud on the new card. I finally just closed the account after having to go through the bullshit of fraud reporting AGAIN. There must be someone at Capital One selling card holder info. I can see this happening once, but not twice. It has never happened with my Mastercard with company or my Amex. The truly shitty thing about Capital One is that I wanted to donate my remaining Rewards points. Apparently, they don’t transfer them to other institutions, not even for charity.
Comment by Sasha — Mar 17th 2008 @ 4:52 pm