Update: Capital One: Waive Your Rights, Get $10 Off Your Next Overlimit Fee!

Here’s the straight scoop on what’s up with the story in that “Capital One: Waive Your Rights, Get $10 Off Your Next Overlimit Fee!” post.

Everett wrote in how Capital One called him up and said, “due to the changes made by [the Card Act], Capital One would have to deny any charges that goes over your credit limit starting in February of 2010. However if you want to maintain the ability to go over your credit limit you could opt to have your account stay the same as it is now. Your fee for going over your credit limit would be dropped to $29 (from $39) if you chose to do this.”

What’s up is that the new CARD act says that if you’re going to charge overlimit fees, customers have to opt-in to it. Most credit card companies have chosen instead to drop overlimit fees entirely. Capital One is actually trying to get permission here, they’re just misleading in saying that they have to “deny any charges that go over your credit limit starting February 2010. In reality, after Feb 10. Capital One has to stop charging this consumer fees for any overlimit transactions.

So you’re not giving up all your rights, you’re opting in to overlimit fees. I’m sure there’s some subset of the population that enjoys paying fees, so I commend Capital One for developing a product line that addresses their needs.

PREVIOUSLY: Capital One: Waive Your Rights, Get $10 Off Your Next Overlimit Fee!

Comments

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  1. idip says:

    Gasp.

  2. PHRoG says:

    We are all sheep…

  3. jik says:

    Capital One is indeed being misleading, but so is the author of the article above.

    Card companies have two choices under the CARD act for how to deal with overlimit charges: (1) decline the charges; (2) allow them to go through without charging a fee.

    Either choice is legitimate. Indeed, card companies may even choose customer-by-customer or even charge-by-charge whether to let overlimit charges go through.

    Capital One has apparently opted for declining the charges. The way they presented that information to the customer was indeed a bit misleading, but the ultimate effect was legitimate and in accord with the law — “You have to opt in if you want us to allow overlimit charges to go through with a fee rather than being declined.”

    Consumerist could have, and should have, done a better job of making that clear. I find the snarky outrage to be just a bit misplaced.

    • techstar25 says:

      @jik: What bank in their right mind would choose option 2? It doesn’t benefit the bank at all. Essentially if the bank allows a charge to go through without a fee, they are saying that your “credit limit” is just a suggestion instead of a hard limit. So why have a limit at all, if they are going to let everything go through?
      I can’t see any bank actually letting these charges go through.

      • bohemian says:

        @techstar25: I can see some logic if the charge is a dollar or two over. Letting it through might be a better option. If it was a $100 over limit that might be another issue.

        They are being very misleading about the terms put in place by the CARD act and not fully disclosing the situation they are asking the cardholder to agree to.

        The truth is they are asking people to opt in to a fee for an action they already might take on their behalf and not charge a fee. So a fee for nothing it what it is.

        I am sure we will see more of this as banks try to find creative ways around the law.

    • LINIS says:

      @jik: Well said, jik.

    • ShruggingGalt says:

      @jik: I agree. The same thing is going to happen with banks and debit cards. Except that when they start clearing checks in the middle of the day, and someone doesn’t check their balance before going to lunch….oh boy.

  4. dognose says:

    If you’re hitting your credit limit, you should probably stop spending money you don’t have.

    The one time I needed to get more money on a card during a busy month, I just paid off some of the balance mid month… and of course paid off the entire balance at the end of the month.

  5. hagirl says:

    Way I hear it jik is right on this.

  6. MostlyHarmless says:

    Whats with Capital One and the scorpion theme? Did I miss an earlier joke somewhere?

  7. frenchic says:

    I kept getting calls from Capital One so yesterday I answered. The man on the phone told me about this ‘new act’ going into effect in February of 2010 much in the same way the author of this post has described. When I told him that I didn’t want the ability to charge beyond my credit card limit period he was incredulous.

    He again tried to sell me the overdraft plan and I again requested that I not be allowed to overdraft my credit, period. The Capital One guy said to me that if I don’t agree to this new policy I might not have enough money in case of a medical or car-related emergency etc because I won’t be able to charge more than my credit limit. The thing is I ALMOST always pay my balance off in full each month–so a lack of credit is not an issue for me in case of an emergency.

    I did not appreciate being talked down to like a child, but Capital One won’t be getting any overdraft fees from me!

  8. Ronin-Democrat says:

    may I have the snake oil burger and the backstabbing pie for dessert. thank you

  9. mythago says:

    Another reason that you might temporarily go over your credit limit is a screw-up by the merchant or bank, which puts charges on your card that you did not make.

    I recently tried to pay for a lunch with a client and was told my card was declined. Luckily I had a backup card, but this was embarassing, particularly as I had carefully checked the card and knew that I had ample balance on the card.

    Turns out that a purchase I had made several days before had subsequently been run through THREE TIMES by the processing company. It was an error and they eventually fixed it, but if I had been allowed to put the lunch charge through I would have gone over my credit limit – thanks to a stupid mistake by somebody else.

  10. apd09 says:

    All your base are belong to us

    [upload.wikimedia.org]

  11. Cant_stop_the_rock says:

    “So you’re not giving up all your rights, you’re opting in to overlimit fees”

    Yeah, that’s what I said the first time you posted this…

  12. Its_Miller_Time says:

    Ironically, Capital One called me last night regarding this. They tried to get me to verify my zip code to ensure that it was me (okay, wierd…). Before I provided any information, I asked what the call was in reference to. The gentleman was very polite and said it was related to the new CARD Legislature and its impacts to my account.

    I simply told him I did not have time to discuss (have my hands full with a newborn) and would call later.

    I am glad I read the first post about this yesterday…because I feel I was well-informed! :)

  13. AllanG54 says:

    Unless you have a really low credit limit what would be the danger in going over it. And this seems like an oxymoron anyhow…why even set a limit if the bank is going to let you go over it. Odds are you’ll be paying interest anyhow so the added $29 is no big deal especially since you have to make your normal payment plus anything that’s over the limit when you make the next payment.

  14. alshultz says:

    That’s funny. I received my call from Capital One about the up coming credit card changes while I was reading this article. The Capital One representative made sure to let me know if I don’t agree to their overlimit fees RIGHT NOW, then I would LOSE THE OPPORTUNITY FOREVER

    No joke. It was a pretty fail-filled scare tactic, telling me if I don’t waive my right right now I won’t get the chance to do it in the future :/

    And to top it all off the representative seemed genuinely startled when I told her I wanted no part in their “emergency” protection plan. Her reaction makes me wonder how many card holders are agreeing to these fees!!! I betting you it’s a good number!

  15. Scatter says:

    I know that it’s a bit off topic but how does the CARD act effect debit card holders?

  16. ChemicallyInert says:

    When will we be able to opt-in to overdraft fees?

  17. mm16424 says:

    I must be lucky. CapOne was my first card, and it’s still my best. No, I’m not a shill for them. My CapOne card has the lowest interest rate, when I make a payment on their website, it’s credited and available next day, I don’t have to pay an “expedite” fee to make a same-day payment.

    I too “opted out” as I don’t WANT to go over my limit. Now, if I can find a bank to work my visa debit card in the same fashion.

    I generally DO know what my balances are, but if I’m in a hurry, and can’t remember, I’d rather run 3 cards and be turned down on 2 than be fee’d for the “privilege” of making a $5.00 charge that goes $2.00 over my limit.

  18. princess says:

    It makes perfect sense what’s going on, if you actually know how to read what you are given. The only reason you get a call is for verbal confirmation to keep the option on an account or not. And its not that you have to “stop charging” over limit fees, it’s is in order to be charged the OL fee, you have to have given them prior consent to Feb 22nd-

  19. frank64 says:

    @jik: It is not evil, it is stupid. Maybe not stupid in the instance you need it, but stupid by being that close to your limit in the first place. Mostly I see credit limits way higher than they should be. You shouldn’t be anywhere close to them. I will grant is that they have been reducing them lately.

    Yes, having the choice can be seen as good, they are kind of making it a false choice though. They don’t need to stop you for going over, they just can’t charge you. They could allow you to over over a few times by a certain percentage and not charge you.

    One thing to realize is the credit limits are there for a reason. They do not want to lend you over a certain amount. If the limits are reasonable to what you can handle(a big if I know) then you should yourself not be anywhere near the limit.

  20. WillB says:

    @floraposte: Stop suggesting people should even toy with the idea of paying medical bills with credit cards.

  21. frank64 says:

    @floraposte: I bet that doesn’t happen that much as compared to people just over using and not planning. You should never pay your ER bill with a credit card!

    I know I will get beaten up for this: You should not go over your limit on a CC for a pet. Your are putting your family in economic peril. The vet bill on animals is as crazy as our medical bills. I know of a few people in severe economic distress because they did this and their pet ended up dying anyway, and with more suffering to boot. In another case, one of my friends vet was using emotional blackmail to push a very costly treatment which research later showed him was probably not going to work.

  22. MostlyHarmless says:

    @harvey_birdman: too much wool.

  23. jik says:

    @frank64: One more time… Going over your credit limit is not the same as “putting your family in economic peril.”

    We had to install an entirely new heating system (new ducts to replace the ones with degraded asbestos, plus new furnace) in our house last month. The total cost of the new system was around $12,500. We put it on our credit card because (a) it was convenient, (b) we get 1% cash back, (c) doing so gave us a good long float on the $12,500, and (d) the installers didn’t offer a discount for paying by cash or check. It put us well over our credit limit. I’ll be paying it off completely when the bill comes. Our family is not in any economic peril.

    What puts you in economic peril is spending more than you have, not spending over your credit limit. Going over your credit limit is not definitionally a bad thing; relying on your credit limit to prevent you from spending more than you have *is* definitionally a bad thing.

  24. pecan 3.14159265 says:

    @frank64: So how should I pay for my ER visit when the banks aren’t open? I don’t think they accept IOUs, and if I’m in a hurry to get to the ER, I’m probably more likely to grab a wallet than a checkbook.

    You are not putting your family in peril when you go over the limit on a credit card – you are simply going over the limit on a credit card. I agree you shouldn’t go over your limit, but if you have the money in your account, putting things on a credit card does not mean the end of the world.

    Yes, vet bills are expensive. But what should pet owners do? Not try? It’s almost as if you’re saying that people shouldn’t have even bothered since the pet “ended up dying anyway” – my grandma needs to go to the hospital, but it might put us in some financial trouble – should we not try anyway?

  25. secret_curse says:

    @jik: If you’re in a situation where your credit needs change drastically month to month, you can look into getting a non-preset spending limit card. They have a limit to the credit line, but when your bill comes in you can pay off whatever you’ve spent above the credit line without a penalty. They’re great for small businesses.

  26. frank64 says:

    @jik: There are the cases like yours but they are a small fraction of the cased.

    The cards limits are there for a reason. The banks thinks you cannot handle any more. They are usually much higher than you can actually handle. If you wanted to put more on them you should call and ask for a higher limit and let them look at your credit and decide. Just the smart thing to do.

    If you decide you want to do that, than by all means opt out, it just isn’t the best thing for most people in MOST circumstances

  27. jik says:

    @secret_curse: Yeah, cards without a preset spending limit are pretty convenient for people who know how to spend responsibly. That must be why I wrote about them here almost an hour ago.

  28. Skipweasel says:

    @GitEmSteveDave_ Natural H1N1 Cure: BOC?
    Can’t find anything that might be suitable here…
    [en.wikipedia.org]

    Except Bump of Chicken, I suppose.

  29. mmmsoap says:

    @WillB: Maybe not for people, but you don’t really have options for animals.

    Yes, my dog is worth $3000 to me, if saving his life won’t extend his suffering. I don’t carry a particularly high limit card, but I certainly could access $3000 within a week or two. (Savings account, or sell some $$ in a mutual fund, etc.) But in terms of “Payment due now, so Fido can get his mangled leg amputated,” I’d go overlimit in a heartbeat.

  30. Kimaroo - 100% Pure Natural Kitteh says:

    @MostlyHarmless: Everyone should learn to knit then. Put the wool to good use!

    /IKnitMyOwnSweatersAtHome

  31. jik says:

    @frank64: Right, and the banks have been oh so very good in the past and determining how much credit debt cardholders can handle.

    In fact, in my experience, they are particularly bad at it in both directions — they often give people less credit than they can handle, and they often give people more credit than they can handle.

    Why you seem to think it’s a good idea to expect the banks to have anything to do with protecting people from getting in over their heads is beyond me. I think it’s pretty clear that they can’t be trusted to do that.

  32. frank64 says:

    @pecan 3.14159265: There is not much I can say if you equate a pet to your grandfather. In my mind my grandfather would be more important, but maybe you don’t love your grandfather like I did?

    I don’t think the slippery slope works for pet to grandfather. You may love your pet dearly but it should be a different issue. Linking them is over dramatic and exactly what the Vet industry wants.

  33. jik says:

    @frank64: @frank64: Most veterinary ERs will not agree to bill you later, but rather demand payment up-front. There is no law requiring veterinary ERs to provide services to people who can’t afford it, nor in my opinion should there be.

  34. frank64 says:

    @jik: Also this is a place of debate and we do have different takes on things, but your posts seem to be disrespectful. I think it might be better to tone it down a little

  35. jik says:

    @frank64: Please stop changing the subject to hide the fact that you said something extremely stupid.

    You asserted that if someone has the money to pay for something, they should just pay for it rather than putting it on a credit card. That assertion has no basis in fact, and if you choose to dodge and change the subject rather than admitting that you were wrong when called on it, then yes, that makes you an ignoramus.

    As for “Any other situation you may be able to conceive of would be less than 1% of any real world situation,” 97.3% of all statistics cited on the Internet are made up.

  36. frank64 says:

    @jik: “You asserted that if someone has the money to pay for something, they should just pay for it rather than putting it on a credit card. That assertion has no basis in fact”

    It is not a fact, it is an OPINION. This was in the context of going over ones limit. If you have the money you should not put a charge on the card to go over the limit. Many people use a card and pay it off every month, that is not what we are talking about. If you DON’T have the money, there are so very few cases that it would be smart too go over ones limit. If it comes up it in because you have not planned for life.

    The amount they will allow you to go over limit I would suspect would be small. That is another reason I suspect that very few times in ones life if at all would it be smart to go over limit. Most limits are much more than someone can handle in one payment.

  37. jik says:

    @frank64: “… the majority of cases is because of some lack of planning.”

    How can you possibly know that?

  38. frank64 says:

    @jik: Normal planning is to have an emergency fund. Something comes up you put it on your card and pay it when the bill comes.

    There are still very few real life circumstances where the small amount they will allow you to go over will be worth the fee. Especially when the nuber of times when the credit limit and the amount will be such that the issue will come up. Your card should not be that close to your limit. In general it is not the best way to run your finance.

  39. jik says:

    @frank64: “Normal planning is to have an emergency fund. Something comes up you put it on your card and pay it when the bill comes.”

    Right. Which means that, in an emergency, you may have to go over your credit limit. You appear to be saying here that’s OK, but you’ve said repeatedly elsewhere in this discussion that it never is. So, which is it?

    “There are still very few real life circumstances…”

    How do you know? Do you feel you are in a position to judge the “real life circumstances” that might occur to everyone in the US who uses a credit card?

    “…where the small amount they will allow you to go over will be worth the fee.”

    Another unsupported assertion. You’ve stated repeatedly that the banks will only allow people to go over their limit by “a small amount,” but you’ve presented no evidence whatsoever to support that assertion. Aside from the question of how much the bank will let you go over an actual credit limit, I and another commenter in this discussion have both noted that there are credit cards which don’t even have a credit limit, but rather have a monthly balance limit.

    The monthly balance limit is determined the same way a credit limit is, i.e., it’s the amount of credit the bank is willing to extend to you. The difference is that with a single billing cycle, I can run up my balance essentially as high as I want, well over my monthly balance limit, as long as a I pay the card down to the limit when I send in my next payment.

    We will see more and more cards switch from a credit limit to a monthly balance limit as the banks figure out how to deal with the CARD Act. As a result, more and more people will be in a position to be able to significantly exceed their limit within a billing cycle, not just to exceed it by “the small amount they will allow you to go over.”

    In short, you’ve offered no evidence to support this claim, and the evidence that is available would seem to suggest that it’s wrong.

  40. frank64 says:

    @jik: “Normal planning is to have an emergency fund. Something comes up you put it on your card and pay it when the bill comes.”

    Right. Which means that, in an emergency, you may have to go over your credit limit. You appear to be saying here that’s OK, but you’ve said repeatedly elsewhere in this discussion that it never is. So, which is it?

    Most people have debit cards also and can use in conjunction with credit cards to cover most real world emergencies.

    “There are still very few real life circumstances…”

    How do you know? Do you feel you are in a position to judge the “real life circumstances” that might occur to everyone in the US who uses a credit card?”

    Yes, I use a credit card. I am able to judge as well as you. We both seem to have different experiences.

    “…where the small amount they will allow you to go over will be worth the fee.”

    What types of Emergencies happen and how often? A car breaking down? To such an extent that you over limit? We have discussed ER’s and they have been discounted. If the working room you have on your card is such that this will bring you over the limit you would have been better off planning something before this happened and having more working room on your card.

    You are focusing on emergencies and I see that it is one of the main real reasons for going over. I just wonder in real life how many emergencies such as this happen to an extent it is immediacy so expensive that it would bring you over limits on all your available cards, and source of funds, and that there is not time to deal the payment in a different time. It mostly would happen if you were close to your limit already.

    I really don’t believe the majority of over limits are due to emergencies. I believe they are mostly due to normal life and life should be better planned for. I don’t think the bank would be that concerned with the fee if it was that rare. It is important to them because it is for happens much more often than the infrequence of real honest to goodness emergencies.

    I think we are going to have to disagree on this because there is no data to support any of ours instincts. I just thing you are either exaggerating the times it applies way out of proportion, or at least not planning for better alternatives. It has never happened to me. I will opt out and have peace of mind, and you can opt in and have peace of mind. We can both be happy.