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Why Jason Dislikes Capital One Credit Cards

Posted By Jim On 07/25/2006 @ 12:18 pm In Credit | 7 Comments

Let me just say that I only have experience with Capital One’s credit cards and not any of their other services. But my experience with their cards has made me weary of ever looking into using them for any other financial services. Last month I received a letter in the mail telling me they doubled the limit on my platinum card with them and I would be receiving an upgrade to their no hassle rewards card. Sounds great? Well, it would be if my original limit wasn’t only 300. And it has been that way for over two years since I opened it. I have called in the past to get it raised but have been told they don’t do customer credit limit increases.

My limit with them now is literally 10 to 15 times lower than the limit other companies give me. Their reward program is also subpar but that is not the worst part. They also don’t report your real credit limits. They only report your high balance. So, for example, let’s suppose your limit was $2000 and you charged about $400 per month with $500 the highest ever balance. Every month you would have 80% utilization (400/500) instead of 20% (400/2000). This will hurt your credit score. You can get around this by making large purchases near your limit or taking advantage of a no fee BT if you’re offered one. That would make the high balance appear as your “limit.” But that seems like a hassle unless you were already going to do this. And most won’t even realize they need to do this to avoid this credit score pitfall.

I could understand this for a card with no preset limit but not for their cards with limits. The sad thing is they probably do this to keep its customers with low credit scores. This makes their customers less attractive to other credit issuers. They will then receive worse offers and be more likely to just stay. A pretty sneaky way of keeping customers. I guess this makes good business sense for them as they seem to target people with little or bad credit or who are not informed about their policy. While this makes sense for the profits of Cap1, it’s not good for customers.

Why don’t I cancel the card? Well, it is one of my older cards so I don’t really want to get rid of it. That would lower the average age of my credit history and, therefore, credit score. Also, unless it has been changed, they have no fees for oversees transaction. These can range from 1 to 3% on other cards. I guess this is the one redeemable quality of the card as long as they keep it.


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