Is Capital One Cheating You Too? The Secret You Must Know About Your High-Interest Account

Are you a Capital One savings account customer? If so, you could be losing thousands of dollars a year and should check your accounts immediately. Here’s how to find out if you’re impacted and what to do about it.

Background

As diligent as I am with my money, I recently discovered I was losing thousands of dollars a year in interest. I thought I had a high-interest bank account with Capital One, but it turns out, my interest rate was only 0.30%. Why was it so low? Because apparently several years ago Capital One essentially archived certain legacy accounts – the “360 Savings Accounts”– and instead created a competing product that actually earns high interest. (These new accounts are called a deceptively similar name – the “360 Performance Savings Account” and currently earn 2.15% interest.)

At first upon learning I had only been earning 0.30% interest instead of a competitive rate, I was embarrassed – how could I as a personal finance writer miss this? Then I was angry, not just for myself, but for the millions of consumers who are similarly situated to me. Why was I angry? Because Capital One told us we had high-interest accounts. Further, when Capital One stopped keeping our accounts at high-interest, and instead created a competing product that paid much higher rates, they didn’t email us or automatically opt us in to the new accounts. They just left us to sit out there believing we still held high-interest accounts.

My first step was to try to make it right by reaching out to Capital One and getting them to correct it for all of us – but they refused and even claimed 0.30% is high interest (more on that later). 

So, now fellow consumers, when a company won’t do what is right, you must do what is in your own self-interest.  Here’s how to check to see if you’re getting the correct interest rate with Capital One. And if you aren’t, what to do about it. 

How to See If Capital One is Cheating You by Keeping Your High-Interest Account at a Low Rate

Here are the step by step instructions for how to see if you have one of the low performing “360 Savings Accounts.”

1. Determine If You are a Capital One (Formerly Known as INGDirect) Bank Account Holder

For years, INGDirect was one of the best high-interest savings accounts available. I remember earning as much as 5% (!)  interest around 2008 with my ING accounts.  Then, around 2012, Capital One acquired these accounts from INGDirect and we all became Capital One customers. (Note: Capital One continued to operate their accounts in the same way ING had – offering competitive rates for the online environment.) Long and short of it, if you used to hold an INGDirect account and never closed your account, you are a Capital One customer. You may also be an affected customer if you opened a “high interest” account with Capital One before 2019.

2. Determine the Specific Type of Capital One Account You Hold

There are 2 ways to see if you have what I call a “Legacy Account” (aka, the account with low interest.)   First, you can determine your type of account by looking at a recent statement. If any of your statements say “360 Savings” below the name of the account, then you are getting an abasyml interest rate. 

The second way to determine your account type is to click on the “Account Details” section of the App/website (at the bottom of the page when you click on your Account) and this will tell you your current interest rate. If your interest rate is 0.30% (or anything below 2.15% – which is the rate they are offering to all their other account holders) then you need to make changes immediately.

If your statement says “360 Savings” or you are earning 0.30% interest, you have a Legacy Account and are getting a terrible rate. 

3. If You Are Getting a Terrible Rate, Switch

If you are a legacy account holder getting one of these awful rates, you need to switch immediately. If you don’t switch, you will continue to get a poor rate instead of a competitive rate. If you like Capital One, you can close your current accounts and open one of their Performance 360 Accounts. (There is no easy way to just switch your account over.) Personally, after my experience with them, I could never recommend them or keep my money with them anymore. 

Instead, I opened an account with Ally Bank because they have historically had competitive rates. I also just read that Elements Financial is at 3.15%, Bask Bank is at 2.75%, and Marcus by Goldman is at 2.15%.  (I have no relationship with any of these banks. You can google “best high interest rate savings account” and make an informed decision.)

I personally am not a rate chaser. Moving money around constantly to try to get the very best rate isn’t a good use of time. But I believe we should all have high-interest accounts. Just find a bank that is known to consistently pay high-interest, and move your money there. 

4. Sit Back and Relax

Once you’ve moved your money, you should be able to rest assured that you will be getting a rate that at least reasonably keeps up with other accounts in the high interest savings market. But, don’t rest too comfortably (as I know I’ve learned my lesson from this experience); so be sure to check your interest rate at least a few times per year – especially when rates are changing as rapidly as they are now. But hopefully once you make a switch, you should be good to go for a while.

5. If You’re Really Angry, Contact a Regulator

Personally, I’m really angry at Capital One and believe they violated the law. U.S. banks aren’t allowed to engage in unfair, deceitful, or abusive acts or practices. I believe that by holding out the legacy INGDirect accounts as high-interest accounts and not contacting consumers of the accounts to let us know that we in fact no longer part of their high-interest rate account family (you can’t even find information about the 360 Savings Account on their website), Capital One engaged in deceitful practices. 

They could have sent an email or automatically rolled our accounts into the new 360 Performance Accounts. But instead, they just let us lose money. I contacted the CFPB and the OCC (Capital One’s regulator) and I encourage you to do the same. Yes, banks can change their rates; but if a bank has advertised an account as high-interest, but then no longer pays high interest (and in fact opens a competing product that does pay high-interest), this seems like classic bait and switch. You can write to the CFPB here and the OCC here. If you want, you can simply email them and say “I’m a Capital One customer who thought I held a high-interest account, but was tricked just like outlined in this article.” (And link to this page). 

The Rest of the Story

As promised, now that I’ve told you how to check on and fix your situation, I told you I’d tell you the rest of the story. Here it is.

After discovering this happened with my accounts. I sent a letter to Capital One. See my letter below. 

My Letter to Capital One (edited slightly to remove any personal details)

Mr. Fairbank and Mr. Cooper,  [Note: I emailed their CEO and General Counsel directly by finding their email addresses]

I have been a holder of Capital One 360 Savings accounts (f/k/a ING 360 Savings) since approximately 2006. I currently hold 9 high-interest savings accounts with Capital One totaling over $xxx,xxx. As recently as July, I held over $xxx,xxx of savings in these accounts. [Note to readers, as you know, I was saving money to take a sabbatical. So these accounts held not just emergency savings, vacation money, money planned for investments but also my 100k savings for my sabbatical.]

I set up these accounts with the understanding that they were high-interest savings accounts. They were advertised as high-interest savings accounts at the outset and they continued to be advertised and operated that way. When interest rates went up, the rates went up; when interest rates went down, the rates decreased. It was my understanding from how the accounts were advertised and operated that I would earn a competitive high-yield rate. For example, your website advertises high-interest accounts with statements like: “Put your savings to work with one of the nation’s top savings rates.” (Emphasis added.)

However, recently, after receiving an offer from a competing bank, I checked the interest rate of my Capital One accounts. All of my 360 accounts are currently earning a paltry .30% interest. I was surprised and visited the Capital One website to confirm that Capital One is paying such uncompetitive rates. On the Capital One website, you advertertise a “360 Performance Savings Account” (“New High-Yield Accounts”) earning 1.90% interest. [Note to readers, since early September, the rates have jumped 2.15%.]

My most recent account statement states my accounts are “360 Savings Accounts.” It appears that Capital One is treating legacy 360 High-Yield Savings Accounts (“Legacy High-Yield Accounts”) differently than these New High-Yield Accounts. The features of the New High-Yield Accounts appear to be nearly the same as the Legacy High-Yield Accounts, except for the interest rate. 

I’ve spoken with several other Legacy High-Yield Account holders who are in the same situation as I am.

It would appear that Capital One engaged in deceptive and abusive practices. Specifically, Capital One led Legacy High-Yield Account holders to believe that they were getting competitive interest rates, but did not pay competitive interest rates. Further, Capital One launched a New High-Yield Account product without properly notifying Legacy High-Yield Account holders of the change or automatically rolling them into these accounts. And finally, it would appear that Capital One did this to intentionally deprive consumers with Legacy High-Yield Accounts of the interest they were entitled based on Capital One’s promises and past practices.

Not only did Capital One violate UDAAP, Capital One intentionally harmed consumers who trusted Capital One to protect and preserve their savings. Particularly during high-inflation environments such as this, it is critical that Capital One repair the damage done.

In addition to being a longtime Capital One customer, I am also a personal finance writer.

On behalf of myself as well as all other similarly situated consumers, I request that Capital One (1) either roll over all Legacy High-Yield Accounts to the New High-Yield Accounts automatically or ensure Legacy High-Yield Accounts operate with the same interest rate as New High-Interest Accounts and (2) reimburse all Legacy High-Yield Account holders for the interest to which they’re entitled since Capital One made this change. 

Sincerely,

Me

Capital One’s Reply

Within a week, Capital One replied to me with the below:

Re: Response to September 10, 2022 Email

Dear [Me],

Thank you for your email. We wanted to reach out and provide greater context regarding your questions and concerns about your Capital One 360 Savings accounts. We are committed to being transparent and meeting the needs of our customers.

As you point out in your email, interest rates fluctuate based on market conditions. The rate on youra ccounts has changed many times, both when they were ING savings accounts and since they became Capital One 360 Savings accounts.

We have reviewed your accounts and the applicable interest rates. While the current rate on your accounts is 0.30% APY, the national average for such accounts as of September 7, 2022, is 0.14% APY, which is less than half the rate for Capital One 360 Savings accounts.

Consistent with interest rate fluctuations, the Capital One 360 Savings Account Disclosures do not guarantee a particular interest rate over the life of an account. Instead, they disclose that rates “are variable and may change at any time.” The interest rate for your accounts is always available on the Capital One website and mobile app, and rate changes also appear on each of your monthly account statements. You can find that disclosure if you click on this link:https://www.capitalone.com/bank/disclosures/savings-accounts/online-savings-account/.

Finally, you may maintain your current accounts as an existing customer, or if you would like to open a new 360 Performance Savings account, you can sign up at https://www.capitalone.com/bank/savings-accounts/online-performance-savings-account/. If you have any questions about this process, please call us at 1-800-655-2265. Thank you again for reaching out. If you have any additional questions, please contact us at 1- 877-215-8591, extension [redacted] I’m typically available Monday through Friday, from 9 AM to 5 PM CT.

Sincerely,

Melissa, On Behalf of Capital One®

To Sum Up

While I shouldn’t be surprised with Capital One’s reply, I did have some hope that by looking at this more closely, they would see the harm they were causing to consumers and make some changes. Instead, they doubled down on their actions. They even go so far as to state that 0.30% is a high rate.  Sure, it’s higher than your average savings account. But it’s nowhere close to the other high interest accounts out there (including their own competing product).

It’s unfortunate when companies can’t do the right thing for their customers (or comply with the law). I encourage you to not make the mistake I did of trusting a bank to continue to offer the product you signed up for.  Instead, despite the changes in the regulatory landscape, we all have to constantly read the fine print. 

If you have a Capital One 360 Savings Account, do yourself a favor and move it to a bank with a higher rate. 

Hat tip to Jim at WalletHacks who originally discovered this in 2019 when rates were much lower. He’s the only other writer out there who I can find who has written about this issue.