Capital One Secured Card rant

[shipo]

To start, following the discharge of my Chapter 13, Capital One granted me a Secured Credit Card when nobody else would, so kudos to them.

Given the model they use for a Secured Credit Card has a maximum of $1,000 for a line of credit, I secured the card with the max deposit ($849) and then started using the card. Since I use the card for lots of activity, I am now only six weeks from having gotten the card and on Monday my 4th payment (all of which were via online Bill Pay from my checking account) was posted bringing my balance to -$150 (I covered two pending charges which should bring my balance to about $0).

Much to my surprise, I checked my Capital One account today and see my available credit is $250!?! I called them and they said, they have my funds on hold, and will continue to do so for a total of 12 days so they can make sure they get the actual money! Honestly, I'm having a difficult time understanding that rationale.

I'm so annoyed at this point I'm thinking to start shopping for another Secured Card and to drop kick this sucker as soon as I get one.

[justbroke]

There are many creditors that do not like multiple payments within a billing cycle. The first payment, if by ACH, can post quickly, but any additional payments are held in abeyance. This happened to me even with NFCU (Navy Federal). I would think that Capitol One is one of the nicer ones. In fact, "Credit" One holds all payments at least 7 days, even when they draw the payment themselves via ACH directly from the other bank.

So, not uncommon for the 2nd and additional payments within the same billing cycle, are "held" for some additional time. I like that my new cards are through the same bank as my available credit "instantly" adjusts when transferred from my (same bank) accounts.

[shipo]

There are many creditors that do not like multiple payments within a billing cycle. The first payment, if by ACH, can post quickly, but any additional payments are held in abeyance. This happened to me even with NFCU (Navy Federal). I would think that Capitol One is one of the nicer ones. In fact, "Credit" One holds all payments at least 7 days, even when they draw the payment themselves via ACH directly from the other bank.

So, not uncommon for the 2nd and additional payments within the same billing cycle, are "held" for some additional time. I like that my new cards are through the same bank as my available credit "instantly" adjusts when transferred from my (same bank) accounts.

Thanks for the feedback. I'm trying to figure out the rationale for holding payments, any payments. The only possible explanation I can come up with is some sort of an AML (Anti-Money Laundering) safeguard. After I get six months with the Capital One card, my plan is to try and get one from my new bank; hopefully they play nice.

[justbroke]

Yes, it's probably AML or, more likely, kiting.

[shipo]

Quick update; today, 24-Jun-2020, nine full days after they posted my payment, they F-I-N-A-L-L-Y released the funds to my account. Yeah, totally unacceptable. I hope to have a new card within a week or so, and when I do, Bye-Bye Capital One.

[sophieanne]

if its totally ridiculous...must be Capitol One..be! I’m glad you have a different option.

[shipo]

I just got back from my bank (TDBank) and signed up for a Secured Credit Card with a $5,000 limit; it will be a few days before I get an answer from their underwriting department before I know whether I'll be approved for that limit, something lower, or not at all.

[shipo]

Final note on my CapitalOne Secured Card:

• Early this week I redirected all of my online accounts to use my debit card instead of my CapitalOne card, and converted all of my real time purchases to the debit card as well.
• Yesterday CapitalOne posted my final payment which brought my account to a $0.00 balance (ironically they released those funds immediately to my account).
• Also yesterday, I tried closing my account via their web app, but it refused to allow me to close it.
• Today I called CapitalOne and asked to close my account; the operator asked why, and then agreed to close it. I also heard a lot of "If this, then that..." stuff which basically said, "We'll send your security deposit back after two billing cycles."

My experience with CapitalOne is mixed, but mostly negative:

On the positive side:

• They granted me a secured credit card when I'd been denied by a few other issuers of credit cards, including my own (and now former) bank, Bank of America.
• The application process was painless, as was establishing my security deposit, setting up the app on my phone (pretty decent app by the way), and activating the card when I received it (about two weeks after approval).
• Their customer service folks, four of whom I spoke with (all off shore), spoke easily understandable English, were polite, and attempted to be as helpful as CapitalOne's rules allowed.
• While not much of a selling point, the face of the card has a brushed metal look to it and the edging is red; all in all, a very attractive looking credit card.

On the negative side:

• They posted a $540(ish) payment I'd initiated from my bank's Online Bill Pay feature on 15-Jun, and yet didn't release the funds until 24-Jun. As I wrote above, their CSR told me they were going to hold the payment for a total of 12 days to make sure the payment was real. Seriously? This was my fourth payment, all from the same source; clearly the first three weren't held up (nor was my fifth and final), why that one?
• Lacking any rational explanation from them as why those funds were held, I can only assume something unethical was going on.
• I checked a number of credit card related forums (CapitalOne's own forum as well as places like WalletHub), and discovered a very disturbing pattern regarding CapitalOne's business practices surrounding their Secured Credit Cards. Contrary to their "Application Terms" which state, "Why Does Capital One Require A Security Deposit? The security deposit is used as collateral against your credit line. The security deposit is refundable if you close your account and pay your balance in full. If your account is deemed eligible for unsecuring, we will return your security deposit to you as a statement credit.", I never found one post, among the many thousands, where an individual was actually converted to an unsecured credit card, even after several years of reportedly "paying the account in full and never being late with a payment".

So, long story short, for any of y'all coming out of a Chapter 7 or Chapter 13 and wanting to start the process of rebuilding your credit, I could strongly advise against using CapitalOne for a Secured Credit Card. In all fairness, I have seen a number of positive reviews regarding their non-Secured products, but beyond that, I cannot comment on those.

[Barbisi]

So shipo, how are you planning on rebuilding your credit?
I am sorry you had such an awful experience with Capitol One. We have not dealt with them for many, many years (long before BK13 was even a faint glimmer on our distant horizon.) I did not like them then and still don't , but I've often heard that for BK13 survivors, they are the only way to obtain credit again -ever!

[shipo]

So shipo, how are you planning on rebuilding your credit?
I am sorry you had such an awful experience with Capitol One. We have not dealt with them for many, many years (long before BK13 was even a faint glimmer on our distant horizon.) I did not like them then and still don't , but I've often heard that for BK13 survivors, they are the only way to obtain credit again -ever!

Regarding CapitalOne, I had heard the same thing, they are the only (or very nearly so) game in town, and without doing any further research, I took the bait. I applied to them shortly after my discharge in March, denied; I waited a month and applied for a Secured Card via Bank of America (my then current bank), and they denied my application as well. I then reapplied to CapitalOne and got accepted. Since that time I've been doing a little digging and have run across sites like WalletHub.com which have huge amounts of free credit resources, and while they do rate the CapitalOne Secured Card highly, they also advocate for a number of other secured cards as well, among them the OpenSky Secured Visa, three First Progress Platinum cards, Green Dot Secured Visa, and the Wells Fargo Secured Credit Card (which is unusual because it offers a card limit up to $10,000 with a matching security deposit).

What I found even more interesting is the huge level of dissatisfaction among users of the CapitalOne card I had; their collective experiences combined with my annoyance regarding the 9-day hold on my payment led me to start looking further afield for a new card. To that end, I had a meeting with the manager of my local TDBank branch and worked with her to establish a secured credit card with them. I was approved Friday and should get the new card within two weeks; the best news is this new card has a $5,000 limit which will allow me to use it for my normal monthly expenses and purchases, and then pay it off once per month instead of needing to send in two or three payments per month to keep from maxing out the $1,000 limit on the CapitalOne card.

[shipo]

Epilogue to this thread...

As mentioned above I paid off and closed the Capital One Secured Credit Card after less than two months of usage and replaced it with a Secured TDBank Cash rewards credit card; this move definitely worked out well for me. Yesterday, just a day shy of six months after I opened the TDBank Cash card, it was unsecured thus triggering the following two events:

1. The locked interest bearing savings account used to secure the credit card was unlocked, allowing me to move the money elsewhere.
2. Almost exactly half of the first year's Annual Fee of $29.00 was refunded to my account.

In the final analysis, if someone is looking for a Secured Credit Card to help build their credit rating following a Chapter 7 or Chapter 13, and they don't need/want/desire a credit limit over $1,000, then CapitalOne is a really good option, however, if you need a higher credit limit to make any such a credit card useful, then look for one of the banks which offer higher limit secured cards (I've identified Wells Fargo, TDBank, and Bank of America as options).