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Capital One '0% Balance Transfer' a Hoax, Suit Charges

Capital One '0% Balance Transfer' a Hoax, Suit Charges

Class action accuses bank of deception and omissions

October 25th, 2012 by Truman Lewis of ConsumerAffairs in News

Capital One Bank dupes credit cardholders into accepting a "0% balance transfer" offer that leaves people worse off than before, a class action claims in Federal Court, Courthouse News Service reports.

In the suit, Priscilla Barton accuses Capital One of "deceptive representations and omissions surrounding its '0%' balance transfer offers."

"Numerous times every year, Cap One solicits its cardholder base to take 0% balance transfers," she alleges in the complaint. "Cap One markets the balance transfers as a 'chance to save' - a means for the cardholder to pay off higher interest loans owed to other creditors. Cap One promises that these balance transfers will carry 0% interest for six or twelve months. ... Cap One promises that it will segregate the transferred balance from other segments of the cardholder's account. The balance transfer comes at a cost: Cap One charges the cardholder a fee of 2%-3% of the total balance transferred."

But, in fact, says Barton, once a cardholder accepts Cap One's '0% interest' balance transfer offer, Cap One unilaterally, and in breach of the cardholder agreement, eliminates the usual grace period and begins charging interest on all new purchases from the date of the balance transfer forward.

Normally, under Capital One's standard credit card arrangement, customers have 25 days after the close of each billing cycle to pay their "new balance" without interest, Barton says.

"Cap One did not disclose that it would eliminate the grace period for cardholders who accepted Cap One's 0% balance transfer offers and subject them to high interest charges," she alleges. 

Other complaints

Barton is far from the only consumer to feel misused. Terry of Lincoln, Neb., recently posted to ConsumerAffairs about her experience, saying she accepted an offer of 0% APR for 12 months for balance transfers and purchases.

"To confirm this offer, we made a call and spoke to a customer service representative. We were told over the phone by this person that if we took this offer  ... there would be 0% APR on purchases and balance transfers till April 2013. So we agreed to do a balance transfer from another credit card, and had no issues."

But then, said Terry, she noticed she was being charged interest on her purchases.

"They said our account had no such agreement. We did not qualify for 0% APR on purchases, only balance transfers. ... [T]hey wouldn't do anything about agreeing to the terms of the offer we received in the mail. They kept telling us that we never took an offer."