Tuesday, July 05, 2005

Sneaky Capital One?

Every month like clockwork, Capital One sends me two small books of checks, one for each of my accounts. They're so you can write a check and it will be charged to your credit card account. I actually used a couple of these over the winter because the big selling point on them was that your interest rate for purchases made with the checks would only be 1.9% (I think) Something very low like that as opposed to my regular rate, which is in the mid teens.



So today, I got my two checkbooks and I actually looked at them for a moment instead of shredding them to pieces. Now that my credit cards are all paid off, I actually thought for a moment about the time when the payoff on my car reaches the level of my credit limit on my highest card and that it might be a smart move to use one of these checks to pay off my car at that time, and then only be paying the low 1.9% (or whatever it was) interest rate on the principle.

However, I looked more closely at the checks, and noticed that nowhere did I see wording about a low interest rate, it actually took me a few minutes to find and see that now these checks are charged interest at the same rate as regular purchases, so it really would be no savings at all for me to use a check to pay off the car loan.

It got me thinking about when this change in interest rate for the checks went into effect. Was it months ago and I just didn't notice...know that I had no intention of using the checks?

How easy would it be for someone, who after months of receiving these checks with the low interest rate plastered all over them, to take the checks without looking closely at them and make some major purchase with them, not realizing that they were not gaining any savings whatsoever in terms of interest?

Just a small lesson as to the importance of looking closely at any paperwork you receive from financial institutions, and especially from your credit cards.

4 comments:

savvy saver said...

Do those checks have a transaction fee along with the interest rate? I've never received a convenience check from a cc company that didn't have at least a 3% tranaction fee.

B said...

That appears to be their big selling point now, as "No Transaction Fee" is plastered over the checks instead of the low interest rate...

Jose Anes said...

On Capital One:
Balance transfers at the standard interest rate are usually free of balance transfer fees.

Special rates may have balance transfer fees.

They recently sent me out balance transfer checks for 4.9% for as long as I carry the balance. I do not need them. If you use them, and you incur in regular expenses at the regular rates, the money will pay first the low rate and leave the high rate accumulating interest.

On all balance transfers you do accrue interest from the moment you transfer balance (no grace period for those charges or anything else you charge until you pay off).

You can't blame credit card companies for trying to make money. That is why I like to buy bank stocks. It is so easy to make money with them.

I do have one of their cards.
I have called a few times to tell them that I need a very low interest (otherwise I don't need the card). They have lowered my interest on both situations. Currently it is at a fixed 7.9% (pretty good). You may want to try that if you have good credit and have had the card for a while.

Money and Investing

tershania said...

I stopped using CapitalOne's credit card months ago. They kept my high interest rate after being with them for 5 plus years. Plus their commercials with David Spade on them are annoying as hell...another reason to switch. I just keep the card at home and out of commission, leaving it open for credit report reasons. Using a Citi Rewards card now and pay off the balance monthly...Capital One blows!