Capital One - Is it a Bain / Romney Company?

[TheBlackAdder]

There is an "Undocumented" payment method Capital One uses. Is this Industry Standard?


1) They offer attractive low-interest debt transfers.

2) When you make a payment, they apply it to your low-interest portion first.
You must pay down the entire low interest portion before they will pay down your higher balance portions.

3) You would probably only find out this 'method' is being used when you receive your statement and in a small box, it shows the balances for each percentage rate being used. When you compare your statements, you'll see that only the low interest portion is dropping. I did not observe any other indication that this 'method' is being used.

4) If you ask where this information is written, their support people will say it is not documented, it's just the way they do it.


===


Home Depot did something similar to this back about 10 years ago. You would have a $3,000 balance on their charge card, they would run a special 'no-interest for 6-months' promotion. You would spend $3,000 on some product. Then, when you paid $600 toward your bill, instead of that $600 paying down the interest portion first, they would pay down the no interest portion first -- meaning you would accrue full interest on the prior portion. The bank they used would adjust your prior charges and change their payment application method to the standard way if you complained -- if it wasn't the Standard Way, why would they be so willing to change and recalculate it when mentioned? (After all, if they advertise free use of money for 6 months without interest, you should be able to pay that entire no interest portion the day before it's due and pay down your interest bearing portion first.)



Capital One does a similar thing, however, THEY WILL NOT CHANGE OR ADJUST THEIR METHOD when requested.


With Capital One, if you have a $5,000 balance at 15% and you consolidated another $5,000 at 3%, they will apply ALL of your payment to the 3% portion forcing you to pay the higher percentage on the full amount of the prior and new charge debt instead of paying it down at a proportional rate. If you have 80% charge and 20% transfer, they'd apply th payment toward 100% of the transfer portion first. It's a good debt consolidation program... IF YOU HAVE NO OTHER BALANCES.


===


Then, I found these:

http://www.hbsslaw.com/class-action-blog/surprise-attack-capital-ones-balance/

http://www.newstribune.com/news/2012/oct/25/capital-one-0-balance-transfer-hoax-suit-charges/

[liberal N proud]

1. Have a super sparklie day!

Frankly, I don't know the answer, just thought this was a good place to use that line.

[Schema Thing]

2. Afaik, that is standard procedure for all credit card companies

[unblock]

4. iirc, the card act requires them to apply payments beyond the minimum to the highest interest rate

i think the minimum payment they can apply however they want but (so they'll apply to the lowest interest rate first); anything beyond that goes to the highest interest rate balance first. in the event that there are multiple balances with identical interest rates, they're again free to choose among them (so they'll apply to the longest term first).

i believe that if capital one isn't doing this, that's not just a violation of the cardholder agreement, it's a violation of the card act.

as for charging interest on purchases when you're carrying a balance, even at a 0% rate, i think that is industry standard and legal, although yes, they should disclose this.

chase has a special feature they call "blueprint" that allows you to still get the grace period for specific purchases if paid in full each month even while carrying a balance. but they're the only bank i know that does this.