Capital One Raises Interest Rates After Balance Paid Off! What happened to Customer Loyalty?

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In my previous post, I mentioned how Chase actually upgraded my credit card to a Visa Signature status. However, for many folks, getting their credit lines cut and interest rates raised even though they have always paid on time or even paid in full, seems to be happening more frequently these days.

I just received this story from Matt of Financial Methods who had his interest rates from his Capital One card jacked up after he paid off his balance! He is pretty philosophical about it and just wonders what has happened to customer service. By the way, you can subscribe to his blog here.

Here is his story:

As I wrote about in the beginning of march, Capital One jacked up my interest rate, just after I finished paying off my balance. It started relatively high (compared to where I would like it) at 13.99%APR and jumped to 17.99%. The notice that I received in the mail indicated that the change was to start on Feb. 16th, the strange part about that was that I did not receive the notice until March 1st. Needless to say, I was frustrated. I was also glad that I had paid them off and that I would not be giving them the extra profits that they were forcing upon other customers.

After researching, and from word of mouth (I do work at a bank, after all) I discovered that this was not a random act of unkindness from Capital One and this has actually happened with many cardholders. Forget that I have been a loyal customer for years and have never had a late or missed payment. Also forget that I had carried a balance for years, usually paying the minimum and in the process, giving them loads of money. Now, keep in mind that I do not intend to carry a balance on this card again, but the rate does still matter to me. After all, sometimes life happens. It was time to make the call.

Nobody likes to go through the monotony of calling customer service. The annoying menus and long hold times just add to the frustration of why the call is being made in the first place. Regardless, I try to make these calls when I am in a relatively good mood. The operators are almost always more receptive to a calm, cool voice on the other end of the line. I often try to put myself in their shoes and imagine their level of annoyance or anger toward who is on the other end of the line. I think like this, because I know that if it were me in their shoes, I would be getting mad, and the madder that I get, the less willing I am to help.

Surprisingly, I was only on hold for about two minutes before I got to a real person. She sounded young (20’s maybe) but experienced. Judging by the language she used, she has been doing the job for a good amount of time and no doubt gets calls like this all the time. Instead of typing out the entire conversation that only lasted a few minutes, here are the highlights:

Me: I’m calling to find out why my interest rate was recently raised and to ask that the decision be reviewed and my previous rate be reapplied.

Capital One: Due to recent delinquencies on a larger percentage of our credit lines, many customers’ rates were raised.

Me: I understand that the economy has been poor, but is it really fair to penalize customers like myself who have never had a late or missed payment?

Capital One: Unfortunately, we will not be able to reinstate your previous interest rate. We have reviewed your account and you are not eligible for a reduced rate at this time.

Me: You do realize that I do not even currently carry a balance.

Capital One: I’m sorry sir, at this time, there is nothing further we can do regarding this matter.

There you have it, take a good customer with good credit and try to get a little bit more out of him and what do you get? One less customer. I will not close my card, but I do not intend to use the card for anything more than a few dollars. I definitely will not carry a balance on the card ever again. I just do not understand the mentality. Jack up the rate on delinquent or frequently late customers, do not go after the good ones.

So I ask, what ever happened to putting resources into customer retention? Too many businesses will pump billions into attaining new customers, but spend far less to retain the ones that have put them where they are. I am not trying to stage an uprising against Capital One or any other business. I am merely voicing my frustration with what I view as an unfair situation. It also makes me wonder how many thousands of other loyal Capital One customers have been through the same grief.

Mr Credit Card: If you have had similar experiences, please share them with our readers by commenting below. Tell us what happened and share your thoughts if anything triggered it. What did you do? Have you applied for a new card?

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12 Responses to “Capital One Raises Interest Rates After Balance Paid Off! What happened to Customer Loyalty?”

  1. aajilon Says:

    Customer Service….that’s a joke. I have had many similar experiences. I am a credit customers who is never late and even pays more than required. I have accounts for a long time and without notice have been cut off at the knees. I have also had interest rates raised to ridiculous rates. and of course customer service is trained in “canned””dumb ass” answers. the good news is that this will eventually cause the downfall of these banks. We as consumers should take this opportunity to rid ourselves of these predators once and for all. when we sign up for these credit cards we agree to their terms about lines of credit and interest rates. We DO NO agree to have them ruin our credit reputation through no fault of our own and that right now is exactly what they are doing. In ruining our credit reputation they not only negatively affect our ability to borrow money but our credit reputation also affects our ability to find and retain employment. This practice must stop and they all need to be held accountable for the damage they have done. When the class action suit is established….I’M IN!!!!

  2. Neil Says:

    Hi

    The problem is that banks and financial institutions abandoned the idea of knowing their customers and treating them as individuals a long time ago. It’s too expensive and can’t be done from a call center in India! Instead they either treat everyone the same or rely on credit risk calculations, and look how well that turned out (buy some AAA debt anyone :) )

    Neil

  3. Janet Says:

    I have been a loyal customer of Capital. Always paid early. Sometimes had a balance. Never a late payment. They just sent notice they are jacking my 7.9% fixed to a 17.9% variable rate!! Of course I called customer service. I was given the line of BS about bad economy. Cutomer loyalty? What a joke. They “screw” their good customers. I’ll pay higher rate with a different card, but the Capital card is in my “to shred” pile. I hope all their good customers go elsewhere. Let’s stick them!!!

  4. Kathy Says:

    I just paid off another card with Chase which originally was a Washington Mutual card due to the fact that they raised their interest rates too high for my comfort. I was told by the customer service rep that I would not have any further charges and that the card would be closed. Then today I receive a bill in the mail for an interest charge of $1.00. Now that might not seem like much and it really isn’t but it is the prinicipal of the thing. I paid off the balance in full well before the due date so why should they be allowed to charge me more interest. I am not sure what I can do about this but I know enough to know that if I pay this charge it will not end there. There will be interest charges on this $1.00 balance!! Ridiculous. Anyone have any ideas on how to fight this?

  5. Milosava Bulajic Says:

    American Express just raised my interest rate from 9.9% to 12.9% (with a 15 day notice). When I called to inquire about it, I stated that I have been a loyal customer for 15 years and have never been late on my payments and that I was very disappointed at this action, the rep’s response was that the interest rates are being raised across the board and that I was not the only one targeted.

    I guess one way for me to view this is as an incentive to pay off my balance ASAP and to never carry one again.

  6. b.j. Says:

    It’s time that everyone get together and start a class action suit against some of these credit card companies.
    also, if people can, they should start pulling out their checking accounts from some of the banks behind this insanity, because they are making money on every check you write.

  7. Michael Mathieu Says:

    American Express informed me that they were raising the rates on my American Express Costco card by 2%. My credit scores from the Big 3 are 798, 802, and 798. I’ve been a customer for 22 years and haven’t had a late payment in over 12 years. I pay my balance in full and charge about 1500.00 per month. The representative refused to negotiate and stated I had to accept the increase or close the account. I closed the American Express Costco account and my Gold card account (22 years of membership). My solution was to get a Mastercard from USAA with an interest rate of 8.69% and a 1.25% cash back rewards program. The heck with American Express!

  8. Miranda Says:

    My boyfriend went online to pay his Captial One payment today only to find that his interest rate had been raised from 7.99% to 17.99%. He has been a customer for 10 years and has had the card long enough to increase the limit from 500 to 5,000. There was only one last payment made and that was because the website was down, the payment was only one day late. He called the customer service line and was told that notificaton had been sent in the mail. We never received such a warning. Now we have no idea if they will let him cancel the card or not. I have been researching other customers’ experiences and so far I have only found one story out of thousands where they approved of such an action. If anyone has and suggestions please inform me. I don’t understand why we haven’t filed a lawsuit against them yet. The interest on the bill is more than 100 and the payment was set at 25. With the house, truck, insurance, and bill payments along with this absurd interest hike I don’t see how we will stay afloat.

  9. loretta Says:

    I paid off my credit card with Capital One on the 11th of this month. I received a statement and was charged interest on the 23rd on a zero balance. I called the credit card company and they said they could charge interest for two billing cycles. Is this legal?

  10. Sandra Says:

    Loretta – same thing happened to me. Capital One can be very difficult to reason with and seems to be ignoring the new rules. I wonder how many others are being charged illegally by Capital One. You can imagine how much money they make by continuing to charge interest to customers who have paid in full.

    Here is what the new rules are regarding double cycle interest.

    No more double-cycle billing: Finance charges on outstanding credit card balances would be computed based on purchases made in the current cycle rather than going back to the previous billing cycle to calculate interest charges. So-called two-cycle or double-cycle billing hurts consumers who pay off their balances, because they are hit with finance charges from the previous cycle even though they have paid the bill in full.

  11. Kevin Says:

    I usually had a small balance. Paid it off and wham – they jacked my rate in my next statement. I am dropping them immediately. 10+ years, and they just bend you over.

  12. Ken Says:

    It looks as if Citi bank is double cycling too. I just paid off a citi bank owned card and low and behold I received a bill for $14 of interest on a card with no balance. I wonder if I’ll get a bill next month of $1.4 interest.

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