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

04/29/2009

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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