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Scott,
I've been an avid reader and newsletter
subscriber for some time now. I wanted to share with you a rather funny
experience that I thought you'd appreciate.
Like all of Capital One's customers, I was hit
with an interest rate hike from 9.9% (purchases and advances) to 15.4% and 22.9%
respectively. I didn't see the 'notification' they sent in the mail (I assumed
it was some sort of solicitation), so it caught me by surprise.
I contacted them and asked if they could
adjust the rate back to what it was. My husband and I have perfect credit, never
a day late and did carry a balance (we used the card for all purchases so we
could get the frequent flyer miles, but we never let the balance get out of
control). Between the interest and the fee they got from the merchant, we were
certainly a profitable customer. Although our history with Capital One was
exceptional, they refused to budge on the rates and informed me that this was an
'ongoing trend' in the industry. No amount of reasoning (i.e. "Is it better to
get 9.9% from a customer, plus merchant fees, or nothing?") would deter them from
their position.
So, I contacted my other credit card company,
AFBA (Five Star Bankcard). Not only did I get a credit line increase, but they
also reduced my 8.9% interest rate (no frequent flyer miles, though) to a fixed
rate (for both purchases and transfers) of 7.9% and no transfer fees. I kept the
Cap One card, but have not used it since.
A little more than a month passed, and I
started to get Capital One offers for 0% for 18 months (transfer fees of either
3% or 2%). I have to laugh. They got greedy and lost a very profitable customer
only to turn around and offer next to nothing to try to get them back. Our
average monthly balance was about $3,500. During that same 18 months, we would
have paid them about $520 in interest (plus they would have made some $$ on the
merchant fees). Now, they'd settle for $105 ($3,500 X 3%) and no merchant fees.
Needless to say, I'm shorting Capital One
stock.
Shannon
Shannon,
Thanks for sharing your story!
This is typical. That is, when the bank will not
reduce rates when you try to negotiate. They deserve to be punished, and the
only way to punish them is to transfer your balance. That's why I have a list of
recommended banks at
http://www.debtsmart.com/cards/. It's not that I support them, it's that we
NEED them to compete with each other so we can win!
I have noticed, time and time again, as you have
with this experience, you receive the best credit offers from your current banks
within a short time after paying them off. You can increase their pain by taking
advantage of their 0% offers. Use their cash, and let them get nothing for 18
months. That's worse than keeping the balance somewhere else. Then, the next time
you call to talk with them, you can say, "Do you guys want to lower my rate, or
should I just transfer my balance and use your money-for-nothin' again for 18
months?"
Nice job, Shannon!!!
Best,
Scott
Scott,
Thanks for your reply. BTW, thanks for the
information on the
2.99% for life Advanta cards. My husband and I had some home improvements to
do and each of us got a card. A lot cheaper than a home equity loan!
Thanks again for all of your great information.
Shannon
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