Personal Finance News
CFPB Suing Capital One Over Savings Interest Rate Discrepancy
The Consumer Financial Protection Bureau (CFPB) has announced that it’s suing Capital One, accusing the bank of tricking customers with its savings account products.
About the suit:
In a press release, the CFPB revealed that it was taking action against Capital One, saying that the bank had deprived millions of customers of more than $2 billion in total interest. This accusation stems from Capital One’s 360 Savings account, which was once advertised as having one of the “best” savings interest rates in the county. However, when the bank later introduced the similarly-named but separate 360 Performance Savings account, interest rates for the regular 360 Savings account froze. Instead, only 360 Performance Savings customers benefited from rising interest rates. The CFPB notes that, at one point, the latter account boasted a rate 14 times higher than the other.
According to the CFPB, 360 Savings customers were not notified about the introduction 360 Performance Savings. Moreover, the agency alleges that the bank even obscured the option from current customers.
As the CFPB details, the creation of 360 Savings came from Capital One’s acquisition of ING Direct in 2012. The following year, the ING Direct accounts were rebranded as 360 Savings. Then, in 2019, the interest rate for 360 Savings stagnated at 0.30% even as rates for 360 Performance Savings began to rise in 2022. APYs for 360 Performance Savings later climbed to 3.30% in January 2023 and to 4.35% in January 2024.
What they’re saying:
In a statement regarding the action against Capital One, CFPB Director Rohit Chopra said, “The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts. Banks should not be baiting people with promises they can’t live up to.”
My thoughts:
Having only been a Capital One banking customer for a couple of years (I opened a 360 Checking to take advantage of a bonus they were offering at the time), I was completely unaware of this move from “360 Savings” to “360 Performance Savings.” However, reading the CFPB’s take on the matter, it does sound pretty shady on Capital One’s part.
In fact, it kind of reminds me of experiences I’ve had with mobile carriers that introduce new and better plans while keeping older customers on less desirable ones until they finally notice. On that note, considering that many 360 Savings customers likely just used the account for auxiliary funds and weren’t paying close attention to it, I suspect the CFPB is right in asserting that most were unaware that they could have been getting far more for their money.
At the same time, even frozen at 0.30%, Capital One’s 360 Savings APY was still better than what a lot of major banks offered. That’s where the marketing that Capital One used (including promoting their “best” or “highest” rates seems to have gotten them into trouble. I suppose the lesson is that you can rip customers off with an inferior product as long as you’re clear about it?
In any case, I’m curious to see how this suit shakes out — and will be adding to the list of CFPB lawsuits I’ll be keeping an eye on.
Author
Other Articles by Kyle Burbank
Economic News
Credit Card News
Fanatics to Launch Rewards Credit Card with American Express
American Express and Fanatics have announced a partnership that will not only result in a new rewards credit card but will also lead to a new option for other cardholders. About the Fanatics American Express Card: This week, Amex revealed that it was teaming up with the sports merchandise site Fanatics. As part of this partnership, the two will create the Fanatics American Express Card. According to a press release,...
Personal Finance News
