I have had a Capital One Mastercard for about 10 years. My interest rate has been 4.99% for as long as I can remember. I received my statement for October to find that my interest rate had jumped from 4.99% to 13.5%.
I called Capital One to find out why. After a completely confusing phone tree and 10 minute wait, I got through to a real person who explained that the increase was not because of anything I did, but because Capital One made an “executive decision” to increase rates “for all cardholders” because of “recent market conditions.”
They then offered to transfer me to another person who has the authority to review my account and see if I can get the rate lowered. This second person re-explained the reason for the rate increase and offered to lower my rate from 13.5% to 12.9%. I argued that I would transfer my balance away to another card or pay it off entirely, but this made no difference. I grudgingly accepted the 12.9%.
My wife and I are carrying more of a balance than usual as we just had some work done on the house that we are floating on the card for a few months. The interest rate increase makes our monthly interest (the amount we have to pay to keep the balance flat) go from $59.20 to $147.11. The difference, $87.91, is more that I pay each month for cell phones, satellite TV or even electricity on most months.
We are fortunate in that we have savings and other cards with lower rates which will allow us to transfer our balance away from Capital One. I’m sure many others will not have that luxury. Why is this not big news? Or is Capital One just screwing me because I had such a low rate to start with and that makes me a bad (low profit) customer? For the record, my credit is excellent and I have NEVER had slow-pays or missed payments.
I’m wondering if any other Consumerist readers have had this experience with Capital One.
First Discover, and now Capital One, is raising the interest rates on large swaths of cardholders, seemingly for no other reason than they feel like making more money. What is this “market condition” they speak of, the lowered Federal interest rate? Scrutinize your statements this month. Is this rate increase happening for other credit card companies too? If you call up and ask why, are they explaining it by saying things like “market conditions” or “to remain competitive?” A larger story could be at play here.
In any event, Chuck is doing the right thing by doing a balance transfer to a lower interest credit card.