Charging me interest when I'm in credit?

[seylectric]

When I got my Capital One credit card I had to lodge a 200 pound deposit (sorry no pound sign on my keyboard), which they still have and pay me no interest on, and I was given a 200 pound credit limit. So effectively they were lending me exactly nothing and charging me 29.9% interest on borrowing.

 

So if I spent 80 quid, I would be charged 29.9% APR even though I was still effectively 120 quid in credit!

 

E.G. I had spent 80 but they had 200 of my money so I am still 120 in credit. How can they justify charging me 29.9% interest on spending 80 pounds of my own money???????????

 

Is there a way to fight this?

 

(Note: I repay the balance in full each month, but this would apply if I didn't do)

[BankFodder]

I'm sorry but I think that this is very funny. I can see how they can justify it - profit.

I don't see why you went for the deal in the first place.

 

How long have you been with them? Have you conducted the account satisfactorily? Maybe it is about time that you asked them for the money back. Do your statements show a credit balance? Or is the £200 in some other account which they have set up to hold it?

I would close it down if I were you.

[seylectric]

The fact is I needed a card for internet purchases and to verify my ebay sellers account. Given the state of my credit rating it's all I could get - I can't even get a bank account with a debit card.

 

I have had the card almost 12 months and the credit limit is £400 - ample for my needs. My guess is that if I ask for the deposit back they will close the account.

 

So basically it serves a purpose, and as I said the interest rate is of no consequence to me as I repay in full so effectively it costs me nothing apart from the negligible loss of interest on the £200 deposit, but lots of people must be paying interest on outstanding balances that are less than the amount of he deposit that they have lodged.

 

I'm struggling to see how they can legally do that.

 

Edit: The £200 deposit is "held" by them but not shown as a credit on the card statement so effectively is held in a different account.

[BankFodder]

I can only suggest that at the end of the 12 month period you contact them and say that you have demonstrated that you are using the card responsibly and you want your deposit back. If they say no then i suggest that you close it. They might change their mind.

[seylectric]

Yes, I was thinking of trying that. Closing it is not really an option as NOT having the card causes me more problems than having it.

 

When I was asking how they can justify it, I meant how can they LEGALLY justify it. I was hoping for something a little more constructive, isn't that the general idea of the site?

[alanfromderby]

This is standard practice with "secured" credit cards. However, generally, companies that offer secured cards pay interest on the money held as security. This would be added to the money when the issuer decided they no longer needed to hold a deposit.

 

If you have had a good track record with them, it would be worth asking them if they would return the deposit since you have proved you are able to operate the account responsibly.

[whistleblowing fairy]

hi,

 

I can tell you now that there is no point asking in 12 months time for your deposit back. You've said it yourself, your credit rating is that bad you can't get a bank account.

 

Basically for your £200 deposit they ignore the info on your credit file and only check the fraud database. And as long as the fraud database says you're ok, you get a credit card. The chance to rebuild your credit rating.

 

Should you do the same to your capital one card as you did with the other accounts on your credit file, they only loose the balance over the £200. Hence, its a secured card. They tried and tested it in the US, where they're the biggest bank.

 

Pay your account on time, every month. Don't go over your credit limit. And you may get a letter in a few years telling you they'll return it. If not, you get a cheque for £200 after you've closed your account.

 

The bad stuff on your credit file will only last six years. I suggest you stick with the card possibly 18 months after that and then you'll have some good credit rating info on your credit file and be able to geet another card else where. Which is the whole point of the card.

 

hope this helps

[seylectric]

hi,

 

I can tell you now that there is no point asking in 12 months time for your deposit back. You've said it yourself, your credit rating is that bad you can't get a bank account.

 

Basically for your £200 deposit they ignore the info on your credit file and only check the fraud database. And as long as the fraud database says you're ok, you get a credit card. The chance to rebuild your credit rating.

 

Should you do the same to your capital one card as you did with the other accounts on your credit file, they only loose the balance over the £200. Hence, its a secured card. They tried and tested it in the US, where they're the biggest bank.

 

Pay your account on time, every month. Don't go over your credit limit. And you may get a letter in a few years telling you they'll return it. If not, you get a cheque for £200 after you've closed your account.

 

The bad stuff on your credit file will only last six years. I suggest you stick with the card possibly 18 months after that and then you'll have some good credit rating info on your credit file and be able to geet another card else where. Which is the whole point of the card.

 

hope this helps

 

 

Good advice. I am now in my 12th month, and have already got a limit increase to £400. The account is kept in good stead and I usually repay in full every month. I'm not that bothered about the £200 deposit they hold, and because I repay in full the card is doing just that (helping to rebuild my credit rating) and because I neede the facility it's worth it to me. The £200 is always mine so no problem with that.

 

However the point I am making is, "Is it right for them to charge people interest on (in this case) amounts under £200 when they hold a £200 deposit?"

 

What I am trying to say is (if you don't repay your balance in full) they are charging you interest, BUT because they hold a £200 deposit, you don't actually owe them anything they surely should not be charging you interest!

[seylectric]

When I was asking how they can justify it, I meant how can they LEGALLY justify it. I was hoping for something a little more constructive, isn't that the general idea of the site?

 

Oops, just to clarify, having just re-read that post I realise it might have sounded a bit arrogant.

 

Sorry, no offence to anybody, it wasn't meant to sound like that!

[seylectric]

This topic was closed on 03/07/19.

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