Here is a conversation I had with the online support at Capital One.
Hi and welcome to our Capital One chat service! One of our Account Specialists will be right with you. Your chat may be monitored and recorded.
You are now chatting with Matt
Matt: Thank you for visiting Capital One. I'd be happy to help you with your account questions. Whom do I have the pleasure of chatting with today?
you: Hi Matt, this is ###########################
Matt: Thank you for the information.
Matt: How may I assist you today?
you: I have a question about the way the interest is charged to my account. I have put my own funds in the account I believe it was $1500.00 I was charged interest on my balance last month which was a balance of less than the amount of what I have put into this card from my own funds. I guess I don't understand why I would pay interest on my own money. Is that money put back against my balance? How does that work?
Matt: Let me check the information for you and verify it for you.
Matt: May I have the zip code and last 4 digits of your account number please?
Matt: Thank you. Please bear with me a moment while I review your account information.
Matt: Let me explain how the interest charges work.
Matt: Interest is not charged for the deposits you made.
Matt: The deposits are for the limit increase.
Matt: Interest is posted to your account at the end of your billing cycle, and is based on a calculation of your average daily balances over the billing cycle.
Matt: Interest will not be assessed on new purchases and other charges if the total new balance is paid in full prior to the date the payment is due.
Matt: If you want to avoid interest on your account please make the payment in full in two consecutive cycles.
Matt: Interest accrues from the date of transaction, date the transaction is processed, or the first calendar day of the billing period.
Matt: Interest accrues on every unpaid amount until it is paid in full.
Matt: The interest is calculated on the purchases you made and not on the deposit.
you: Ok, so to put this a little clearer, if my credit unsecured is $200 and I deposit $1500.00 of my own money, do I get charged on any balances that are less than $1500.00?
you: In other words, if my balance never exceeds $1500 (my money) do I get charged any interest?
Matt: If the balance is paid in full every month, then there would not be any interest charges.
Matt: If the balance exceeds the limit, then there would be a over limit fee.
Matt: So, I would request you to keep it under the limit to avoid over limit charges.
Matt: To avoid interest you would need to pay the balance in full.
you: I don't think we are understanding each other. I have $1500 of my own money invested in the card. So long as my balance remains under $1500 I should not be charged any interest because I am not borrowing any money, it's mine.
you: Or it doesn't matter if it's my money, if there is a balance I get charged interest regardless of how much money I put into the secured card.?
you: I don't go over the credit limit, I am not talking about that at all.
Matt: I understand your point
Matt: Your question is why is that you are paying interest on the deposit that you have made on your credit card
Matt: The deposit that you have made is just to get a credit limit on the account . Based on the deposit amount the credit limit will be assigned
Matt: However , if you spend your card and there is a balance you owe on the account , in order to avoid interest on the account we would have to receive the payment in full each and every month on or before the due date.
Matt: I hope the above information was helpful
you: Yes, it was. How do I get my money back?
Matt: Let me explain about the same
Matt: If you ever close the account and pay the balance in full, your security deposit is fully refundable.
you: So the only way to get my money back is to close the account? Can't I keep the account open and the bank can simply reduce the credit limit back to it's original level?
Matt: Yes, the only way is by closing the account.
Matt: Unfortunately, you can not reduce the limit applied to the secured card.
Matt: I really apologize for any inconveninence.
you: So even though I initiated the increase with a deposit transfer from my bank account, I can only get that money back by closing the account. I think doing that negatively affects my credit score. This does not seem to be a fair way to do business.
Matt: I understand your point.
Matt: But, I am really sorry for it.
Matt: I wish I had an option to help you with this.
Matt: But I am extremely sorry.
you: Ok, thanks for your help.
Matt: You're welcome.
Matt: Is there anything else I can help you with today?
you: No, thanks. I do better when Capital One doesn't help me so much...lol
I'm sure in the fine print which I did not read, it says that the deposit I made is not considered to be available funds, it only allows you to get a larger credit limit? If you carry any balance regardless if it's less than your secured deposit, you get charged interest on it.
So they charge you interest because they say the money is not part of the available balance...but if you don't pay they still charge you interest and pay it out of the deposit...pretty slick.
All over their online account the advertise in large type encouraging you to increase your limit with a bank deposit.
Now the only way to get my money back is to close the account which has a negative impact on my credit.
Banks, gotta love 'em.