Capital One secured card (don't do it)
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.
Think about the concept of the secured credit card in the first place. You are borrowing your own money!
Maybe your credit score is not as important as you think. Honestly, if you had to get a secured card to begin with I wonder how much more damage can you do by closing a paid in full account?
Check out "The Total Money Makeover" by Dave Ramsey. It's another way to look at credit and debt - more of an old fashioned approach to things.
We have all grown up using the credit and banking system and don’t realize what it must have been like before the idea men begin to take the real wealth away from the hunters and use it to control the world.
Can you imagine how persuasive the first banker must have been to sale this whole idea that we have come to see as normal everyday business practice? I sometimes amuse myself by picturing the following scenario, yah I know I am easily amused.
Caveman Banker: Hey I just got a great Idea let me store your extra spear points and flint rocks, and I can watch over them while you are out hunting Mastodons.
Caveman 1: Sounds like a good Idea are you going to do this for free?
Caveman Banker: sure absolutely free, and you can get back your stuff anytime you want it.
Caveman Banker: Say Caveman 2 I have some extra spear points, and flint rock that I can loan to you so that you can go Mastodon hunting.
Caveman 2: Sounds like a good Idea are you going to do this for free?
Caveman banker: Well no not really free, you will need to return the Spear points and flint rock and in addition give me more spear points or flint rocks say 10% of what you borrowed we are going to call that fee “Interest”.
Caveman 2 Well I want to go hunting so I guess I will do it. Now at this point the Caveman Banker has just loaned out Caveman 1 stuff to Caveman 2 and Caveman Banker is going to collect the “interest”
A little latter down the line Caveman Banker: Say Caveman 1 I am going to start charging you for keeping your stuff, I have started keeping stuff for about 10 other Cavemen and I have had to pay someone to help me and we have had to secure an area in the cave with a cage built of Mastodon tusks to keep the stuff safe and we have to give other cave people some of your stuff to help watch your stuff, we are going to call this a “service fee”.
Caveman 1: But I see Caveman 2, 3 and 4 using my spears don’t they pay you for that, shouldn’t that cover you costs?
Caveman Banker: Well we call those “Interest” fees and we can’t raise them anymore to cover our increased costs because Caveman Banker 2 just remodeled a big fancy cave and we have to keep our “Interest” fees the same as his or he will take all of our Customers. Besides that because of the fancy new cave I have to wear clean animal skins every day and wear animal teeth around my neck and that all costs me more flint rocks. I even have to have someone come in and polish the Mastodon tusks once a week I tell you this banking business is getting tough.
That is how the real wealth was taken from the Hunters and transferred to the idea men in the clean animal skins and neck pieces made of animal teeth.
So now if we want to go hunting we have to borrow someone elses stuff from the idea mean and pay them their pound of flesh.
I have a capital one card and get 2% cash back!
That's awesome Tom! I love it.
Secured cards are for folks with less than stellar credit. IF you happen to be one of those folks, you don't need a CC IMO. You can get a bank card from virtually any bank you do business with.
CC's are good for getting people in trouble, who otherwise have little self control in their spending.
A "secured" card seems redundant too. Why have one IF you have to deposit "security" cash? You'd be better off just paying cash and saving yourself the interest on YOUR money.
The purpose of secure cards is to reestablish credit. Cash only is great. But at some point it your life, you will rpobably need investment capital for a major purpose lie Oh... maybe a home, small business, unplanned medical expensem etc. Meanwhile you'd have to choose to lower your standard of living, while you saved up enough money.
The key isn't one extreme or another. Its' balance. Haivng cash reserves, while still borrowing for major purposes, but being a low enough risk, that the interest rates are only slightly higher than inflation.
Heck, after you factor in the tax deduction for interest paid on your mortgage, what you're paying to borrow a large amount of moeny is only slightly higher than inflation. Facotr in even a very modest 1-2% appreciation for the property, and this is called buildign wealth.
Hello, this is PEGGY, you deposit to our coffers, you use charge card, you need to pay for what you charged, we keep your money in our account, you pay interest on amount you didn't pay off at end of billing cycle; did I tell you your money is ours. In order to get your deposit returned there are fees associated with transaction
closed the friggen' account, and get as much back as possible, before you get screwed worse.
It`s better to be silent and thought the fool; than speak and remove all doubt.
It's actually my wifes card. I am additional card holder on the account. I opened the account for her in order to start to establish credit. she has never borrowed a dime in her life.
I 'thought' it would be a good way of establishing credit for her without actually borrowing any money. It still is I guess, so long as it is paid off each month. I just misunderstood the terms. I figured if you have secured funds, there would be no interest so long as the monthly balance is less than the deposited secured funds. Not so...obviously.
Here is another of the same type of documentary.
Its long winded but worth watching. Teenagers will get a head start on finances because they don't show this stuff in school.
Originally Posted by cjpwalker
catch a man a fish , feed him for a day.
teach a man to fish , ruin a good business opportunity.
The deposit is there to recoup any non payment. Its only a priciple if you don't pay in what you borrow.... so unless you buy 1500.00 worth you've defaulted the rest. Its bizzar but that's what happens when you go global in the banking world. If you plan on establishing blood sweat and tears kind of credit find a LOCAL < yes "hometown") type of credit union or bank. The face to face transfers are great .
Originally Posted by cool-in-cayman
I've had up to 9 different banking accts at one time. Suntrust once locked down one acct that contained over 90% of my money. They redflagged it for "kiting" money. I went to the bank and pitched a friggin' fit but didn't matter it was a corperate issue. I threatened to pull the manager across the sillard it almost landed me in jail. But I learneed a lesson.
catch a man a fish , feed him for a day.
teach a man to fish , ruin a good business opportunity.
SunTrust,Ticker STI,I got that stock!
Don't need spear points and flint rocks any more.
Are you short of cash and tired of living from paycheck to paycheck ?
Then come to the bank of mojo and all your problems will soon be over.
At the bank of mojo we will start you off at a mere 1% interest rate variable to 5% over a contract period of 3 years (if you qualify) then base that interest rate on commodities performance.
The yields can be worth your while to look into this once in a life time deal.