What's in your wallet? Hopefully not Capital One.


MY EXPERIENCE
For many years, Capital One was my preferred credit card. I've owned a Capital One Visa since 1999, and I've used it extensively over the past decade for just about everything. I enjoyed the cash back aspect, and never really saw a reason to go anywhere else.

My credit limits have steadily increased over the years, and now this card has the highest available limit except my AMEX card. It seems my APR with Capital One was also quite good. The last time I gave it a glance, it stood at a reasonable 9.9% APR.


CREDIT CARD COMPARISON SHOPPING
Recently, I decided to get some other plastic. It wasn't that Capital One (CrapOne) had treated me poorly, but I felt like it was time to seek out a better deal.

Capital One's 1% cash back was okay, but I knew there were better cards available like the Citi Dividend 5% card (now discontinued) and Chase Freedom. I started investigating and quickly realized that Capital One's cash back policy was quite weak, so I have started using other plastic. Ultimately, I found there are numerous credit cards which have no annual fees along with a higher cash back rate than Capital One.


FULL HASSLE CASH BACK
Way back when, Capital One used to mail me a rebate check periodically for the cash I'd "earned." Some years ago, this policy was discontinued and customers now need to request cash back. This can be done through their website and the cash can be used for statement credit or a paper check. The increment was $25 minimum to cash out, which meant spending $2500. The cash back didn't expire, but a high increment such as $2500 for $25 takes a while to reach.

When I checked my rewards account, I noticed that I had only been getting 1% on everything. I compared this to their current offering and it seems that cards now were 1% with a 25% annual rebate with no $25 increment. It wasn't a big monetary difference, but it was going to be a factor between Capital One getting my business or using some other plastic.

I called in, and had some very long hold times. After getting transferred around a few times and speaking to several unhelpful customer reps, I was informed that since I signed up in 1999, I wasn't eligible for the upgrade to a better program. I was disappointed to say the least, and I asked how I might be able to switch to a better cash back program. Capital One's answer was blunt: "You cannot switch -- ever. You can only apply for another card." Hey, thanks a bunch Crap One for being so unhelpful.

I've decided that my card, despite its name, was actually more appropriately titled "Full Hassle Cash Back."

A bit off-topic here, but in stark contrast, I also own a Chase PerfectCard. This card credits the cash back immediately to the next statement - no increments, requests, or other games. The Chase Perfectcard is truly "No Hassle Cash Back." PerfectCard also gives 6% cash back on gas for the first 90 days, and 3% thereafter. It's simply a no-brainer that it's a better deal than Capital One's Visa.


RECENT RATE JACKING
I currently have an APR of 9.9% on my Capital One card, but I recently got my last statement which had a disturbing notification.

"Your account is changing. These changes will start with your April 2007 billing cycle. This is the rate your APRs may increase to if you make two late payments within twelve billing periods. If your APRs increase to the Default APR your new rates will be as follows: A variable rate that equals the Prime rate plus 19.9%, currently at 28.15% ANNUAL PERCENTAGE RATE"


Honestly, I really don't care that much about the harsh APR rate jack, since I always have paid my credit card balances off in full every month. Nonetheless, it's an indication that Capital One is becoming more like Crapital One.


WHY SHOULD I USE CAPITAL ONE?
Given the non-competitive nature of their cards, along with rate jacking, and full hassle cash back, one might wonder why anybody should consider Capital One.

At this point, I still use my Capital One Visa card for international travel. At least for now, there are no conversion fees, and this is a great feature of the card. Most other cards assess some foreign transaction fees, so Capital One is still a winner in this regard. I'm not holding my breath though, since I'd wouldn't be a bit surprised to see them jack up the fees for foreign spending in the future.


CONCLUSION
In sum, Capital One's No Hassle Cash Back card should be renamed to "CrapOne FULL Hassle Cash Back." They aren't the best credit card issuer, and most people with reasonable credit can do a lot better on rewards.


You might be interested in reading my other financial reviews:
E*Trade
Ameritrade
Apple Bank
Wells Fargo
Netbank
Sharebuilder
Emigrant Savings

Recommended: No