October 25, 2012

Capital One Accused of Tricking Credit Card Holders into Losing Payment Grace Period

Accepting a Capitol One Bank offer to transfer debt from another credit card lender comes with hidden, and costly, consequences, according to a lawsuit filed against the company.

Plaintiffs in a class action case claim Capital One tricks customers who accept a “0% balance transfer” deal. The offer seems enticing because the company says consumers will enjoy no interest for six to 12 months on the debt they move over.

But hidden in the terms is this caveat: Authorizing a debt transfer can result in customers losing their 25-day grace period on new balances resulting from purchases made with their Capitol One cards. This results in high interest rates being immediately applied to outstanding balances, according to the plaintiffs.

“Unbeknownst to plaintiff and classes, however, once a cardholder accepts Cap One’s ‘0% interest’ balance transfer offer, Capital One unilaterally, and in breach of the cardholder agreement, eliminates the grace period and begins charging interest on all new purchases from the date of the balance transfer forward,” the complaint reads.

Capital One also charges a fee of 2%-3% of the transferred amount.

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