Capital One balance transfer interest rate hike

Reya

I received my latest Capital One Mastercard statement today, and since I'm the kind of person who inputs everything onto spreadsheets I was logging all of the data it included when I noticed my balance transfer interest rate had gone up from 0.482% per month to 1.888% per month.

I swear that when I applied for this card, several years ago, the balance transfer was a 'life of balance' one, so surely this interest rate hike can't be legit? I wish I knew where my original documentation was (I've no idea right now, as it's some seven or eight years since I got the card) so that I could check.

The only thing I can think of is that I've finally paid off the original balance transfer (CapOne lists those as 5th in their payment allocation) and this is now interest on the interest that I accrued on the transfer. I know that sounds weird, but in the blue sidebar on the left of the statement, it says: "The Purchase interest rate also applies to any interest payable on Balance Transfers".

That suggests to me that I've paid off the transfer and that I've now been switched onto the same interest rate as for purchases, while I pay off the interest on the balance transfer. (And yes, I was silly and bought on the card, but that was before I'd heard of MSE and Martin's advice to never buy anything on a balance transfer card.)

So my yearly interest on the balance as a whole has gone up from 5.784% to 22.656%. Looks like I'm going to have to re-arrange my snowball calculations now, and Capital One are going to get at least two more months of payments out of me, because of this interest hike. Sneaky sods.

ad44downey

they bumped my interest rate up from 14% to about 35% in one fell swoop so no suprise there then

moonrakerz

Surely the aim of most of these "special offers" is to trap you with that card issuer.

I (as reported on another thread) have just got a Capital One card for the offer of 0% until May 08. I was delighted to get such a large credit limit, £6K, considering that I am retired. Normally I get offered £2K-ish to start with.

Perhaps I am being cynical but I wouldn't be at all surprised if the idea is to give someone a larger credit limit than they might normally expect, so that come the end of the interest free period, they can neither pay it off (which I can do) NOR very easily transfer this large outstanding balance to another "0% offer" card.
They then jack up the interest rates on that account - nice little earner !

drbig

I have just found a similar thing with MBNA they are about to do a rate hike to 24.9% on anything that was a balance transfer lucky for me the card is clear and about to be terminated.