A Call from Capital One

I don't often post follow-ups to previous articles, especially after just a few days. But following Tuesday's post on two-cycle billing, a couple of things happened that deserve mention.

Understanding Grace Periods
Several readers suggested that what I experienced was not two-cycle billing but the lack of a grace period. Special thanks especially to Kitty, who linked to the American Express document on understanding grace periods. Kitty wrote:

If you didn't pay your previous month's bill in full, grace period no longer applies, and you are charged interest ON ALL NEW PURCHASES until you pay another bill in full. After you do it, your grace period starts to apply again, but you still have interest that accrued on all new purchases you made in the meantime.

So, when I accidentally paid my credit card bill $100 short, the grace period for the next billing cycle went away. In order for me to regain my grace period, I'd need to pay the bill in full two months in a row. This isn't two-cycle billing, despite what the Capital One customer service rep told me.

A Call from Capital One
Meanwhile, Kathy from Capital One customer service left a comment:

Please note that Capital One does not use two cycle billing; we never have. Two cycle billing is when a company computes finance charges on the average daily balance of the last 60 days rather than just the last 30 days. What that means is that they will go back two billing periods before the cardholder sent in their payment, and average the daily balance of all 60 days.

Capital One does not use two cycle billing. If your closing was today for example, we would stop, go back 30 days, and take the average daily balance of those last 30 days, assess finance charges and then send out your statement. This is one-cycle billing.

Kathy was able to track down my account information, including my phone number, so she gave me a call. We had a pleasant chat.

She confirmed that what GRS readers had suggested — that the issue was with the lack of grace period — was, in fact, correct. Kathy explained that with two-cycle billing, the credit card company computes the “average daily balance” (which is what they charge interest on) not just on the current month, but on the previous month, as well. That's not what happened in my case.

In my case, when I mistakenly paid my bill $100 short, my account began to accumulate finance charges. During the second month, I paid my bill in full. But because I was carrying a balance, the grace period for that month didn't apply, which means I still accrued finance charges. Again, the only way to get rid of finance charges is to pay my bill in full two months in a row.

I think I understand things now.

During our conversation, Kathy offered to refund the finance charges I had accrued — not just the second month's finance charge, but the first month's charge, as well. I felt almost guilty accepting this offer, but I did so.

Conclusion
Now, I realize I'm in a sort of special position. I have a public blog that gets enough attention for Capital One to notice and respond to my complaint. Most people don't have that sort of leverage.

Still, I'm grateful for the way Capital One handled this, especially considering the entire thing stemmed from a stupid mistake on my part. I'm not about to become a spokesman for Capital One, but I'm satisfied with the way things worked out.

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Jason
Jason
10 years ago

That’s great! Capital One did the right thing for them. Given how many people read this blog, your good experience with any company goes a long way for them.

Sandy E.
Sandy E.
10 years ago

JD that’s great, but I will have to confess that the other day after reading your article, I googled: Capital One Problems, and a HUGE amount of consumer complaints came up!

casey
casey
10 years ago

Hey JD Congrats on the win with the cc. I used to work for citibank citicards customer service and while you pause to pray for my soul let me give some hints: 1. if you have been a pretty good customer and pay in full every month call if you get an interest or late fee charge, it’s not written in stone! 2. be nice/pleasant when you call and be amazed and what can be done 3. lower interest rates are usually just a call away. if the card doesn’t have a lower rate available there’s a different one the… Read more »

Shara
Shara
10 years ago

Good Housekeeping does this. They use their position to help the little guy with specific problems them publish them. Say there is a rebate that isn’t being sent, Good Housekeeping will call public relations on behalf of the person and ask for a full explanation then publish the results. You might want to consider something similar. If you posted a specific problem of a single person once per month you give their problem exposure that may result in similar action. It might not be worth the work, but it’s always good to have ideas on the back burner. Maybe even… Read more »

Des
Des
10 years ago

@Sandy E: Try google-ing any major credit card company. You’re going to come up with a HUGE amount of customer complaints no matter who it is.

Tyler@Frugally Green
10 years ago

I’m not very concerned about how a credit company assesses fees and finance charges because I don’t ever carry a balance, but I appreciate the follow up article because, as you demonstrated, mistakes can happen. The real value in this article is seeing that Capitol One is willing to work with their customers (so long as you get past the first line of defense). I was looking for a new credit card the other day for a project I’m undertaking and a satisfactory report from you sealed the deal for me. On your short-pay mistake: I know you pay attention… Read more »

jg
jg
10 years ago

Don’t feel guilty accepting the waived charges – I have found that many companies (well, at least as of a year ago – things have likely tightened since then) will waive finance charges if you CALL TO ASK, if you have a consistent record of paying in full. This is even more true if it’s fairly obvious a mistake was made (i.e. transposed numbers) and you intended to pay in full (or have already sent in a second payment to make up the difference.) I have found it very important to call when a one-time problem arises, because you can… Read more »

bethh
bethh
10 years ago

That’s great service. However I’d still move away from Cap One, and look at a credit union’s card instead. I strongly dislike the business model of big banks! Many credit unions have cash-back deals similar to the one you have, and usually will have better policies. And if you *still* manage to make a mistake, at least the money’s going to a local business. 🙂

Chickybeth
Chickybeth
10 years ago

The point I got from these two articles is that in every company there are at least some great customer service people who will go out of their way to help you if they can. I have been on both ends and I know that even if the company itself has a bad reputation (or a good one!) that doesn’t necessarily have to be your experience. This goes along with what I have learned from having student loans: if someone is rude to you or says they can’t help you with a problem, just keep calling back until a new… Read more »

ebyt
ebyt
10 years ago

Ah ok. Makes sense!

Well I am glad it worked out.

Teeni
Teeni
10 years ago

I’m an avid reader of your blog and have been completely debt-free for 1 1/2 years. This credit card post has served to further convince me that I don’t have the time or the mental stamina to keep up with credit card accounts anymore, no matter how many benefits, points, perks, miles, discounts, and rewards they might claim to offer. Getting rid of the credit cards and instituting a firm no-credit policy was the single best thing I’ve ever done to get my financial life in order.

Richie
Richie
10 years ago

Sweet! Now all I have to do is start a blog with 10,000 readers per day (or whatever you get), and maybe my credit card companies will treat me well!

Seriously, I’m glad that they fixed the problem for you, but I can see that they probably mistreat a lot of other people who don’t have the ability to embarrass them publicly.

elisabeth
elisabeth
10 years ago

what I think is interesting is that it was difficult for you to understand what was going on — I really hope the new rules for credit card companies will include simpler statements of their rules. Today I got a mailing about a car card I’ve had for years. I recently was sent a new card because to extend the expiration date. the new mailing included these sentences: The first year the Annual fee will be waived. Thereafter, the Annual Fee is $25.00 and will be assessed on the Account at the beginning of each one-year period. Thereafter, if you… Read more »

Dan
Dan
10 years ago

Way to shill for CapOne for some finance charge reversals.

-d

J.D.
J.D.
10 years ago

Oh good grief, Dan. I’m not shilling for Capital One. In fact, I intentionally left out any links to the company’s web sites just so there could be no confusion about my intentions. Apparently, that wasn’t clear enough. I posted this because I think the clarification is important. My previous article contained misinformation, and I wanted to set the record straight. You’ll note that I also mentioned American Express in this post (and linked to their site). Why not accuse me of shilling for them. I’ve never shied away of mentioning the companies I use, for good or ill: Fidelity,… Read more »

Shogun @ Financial Samurai
Shogun @ Financial Samurai
10 years ago

WAY TO GO JD! It is awesome you have this kind of leverage over big corporations. The power of free speech, and the American dream.

Just stop not paying your CC bill in full! 🙂

Best,

Shogun

JF
JF
10 years ago

JD, your blog is read by thousands. It is imperative that you do better research in the future. If someone in the mainstream media published as many errors as you and Trent from “The Simple Dollar” do, you’d probably get sued.

mary b
mary b
10 years ago

Thanks for the follow-up since it probably will help many others understand a little better how things work.
It’s great that Cap One pays attention and followed up with you.
Gee I wish my Ex-phone company FairPoint would do that with the blog I recently wrote about them! I don’t get any traffic yet, so doubt that will happen, LOL!

J.D.
J.D.
10 years ago

@JF (#17)
That is a fair concern, and one I share. I do work hard to avoid errors, but there’s no question that some slip through. I’d like to point out, though, that the mainstream media is riddled with errors. I’ve had some limited exposure to big name media outlets, and let me assure you that they screw up stuff all the time. 🙂

Mo
Mo
10 years ago

This actually gives me a more negative view of Capitol One. They weren’t willing to work with you when you were a “regular customer”. The second they found out you had an audience they were more than willing to “make things right”.

J.D.
J.D.
10 years ago

Also, JF, that’s one reason I’m so reluctant to wander too far afield, to cover topics about which I have little exposure. As I get outside my areas of expertise, the risk for error goes up dramatically.

I’m just finishing a couple of posts on the U.S. budget and taxes. I’ve done my damnedest to be sure my figures are correct, but I suspect I’ve made mistakes. If I covered this sort of stuff all the time, I’d feel more comfortable.

SingleGuyMoney
SingleGuyMoney
10 years ago

Wow, that’s when you know you are in the big league. Post an article and have the credit card company call you.

branderson
branderson
10 years ago

I believe you didnt intentionally use your website for this but…

It seems a little unethical to use your position for your benefit. I think you felt bad about the refund because you recognized this. You knew it was wrong to take the money only because you had a popular forum to voice your opinion. They only refunded you because of this, they denied you when you were joe everyman.

I think it would have been better to refuse the refund. OTOH thanks for clearing up what the problem really was.

Tyler Karaszewski
Tyler Karaszewski
10 years ago

Big media outlets like the Wall Street Journal post corrections to previous articles all the time. Everyone makes mistakes. J.D. is no different. Had he not posted this correction article, no one would ever have even known the first article was wrong.

Nathan
Nathan
10 years ago

Capital One is SHADY. Pardon my french but “F them!” They tried to jack my rate to > 20% a couple of years back after a payment that was late by 2 days even though I mailed it with plenty of time and not a late payment in many preceding years. I argued with them on the phone for about 20 minutes and never got anywhere so I immediately transferred the balance to American Express and cancelled that card. I’ve never had a problem with AmEx. Capital One pulled similar stuff with a couple of family members but they just… Read more »

Rudy
Rudy
10 years ago

I had Capital One did this to me before, and their answer was also to pay in full for two months, including the two finance charges.

Interestingly enough, this doesn’t happen with my Coscto American Express. I was late to pay for one month, got a finance charge, paid that in full – and I never got a second finance charge on the next bill. Maybe AMEX is better at this and automatically waives any finance charge that may happen on the next billing month.

Credit card companies are very tricky when it comes to finance charges.

J.D.
J.D.
10 years ago

@branderson (#23)
Maybe what I should do is take this $25 and use it to start…well, I don’t know what. A financial literacy fund? Something. I’m headed in that direction, anyhow, eventually. This could be the seed money! 🙂

Budgie
Budgie
10 years ago

Great… Glad that you got that sorted!

Claudio
Claudio
10 years ago

Does it scare you that a Capital One representative could track down your personal information just from your blog post and contact you?

Do you think that was in violation of Kathy’s job duties?

What makes Kathy think she can access your account information, without your permission, solely because you wrote about it in your blog?

If she did violate her code of conduct, I hope she is reprimanded. I wouldn’t want a customer service rep accessing/viewing my account information and contacting me without my permission.

Scary.

slowth
slowth
10 years ago

J.D., you’ve made it clear that you’re a regular guy wading through the complexities of personal finance. Please don’t apologize for trivial mistakes. Also, I’m somewhat surprised your site has trolls. We just can’t escape the dullards.

Richie
Richie
10 years ago

@JF (#17),

I don’t think JD ever actually posted any mistakes yesterday. He simply wrote about what the customer service rep told him. The customer service rep was wrong.

Sheila
Sheila
10 years ago

I, a regular person, had the same thing happen with my Capital One card, although it was along the lines of a $27 transposition error rather than $100. I called Capital One, whined a bit (albeit nicely), and Capital One reversed the finance charges. The first person I spoke with said no way so I asked for a supervisor. On the other hand, I asked for my limit to be raised above $20,000 because I was remodeling my house, and I wanted to put the materials on the (rewards) card, but they wouldn’t raise it. I never carry a balance… Read more »

Sri
Sri
10 years ago

JD,
Good that you got your money back. But the only reason Cap One paid you back was the amount of negative publicity your blog would generate. I would say $25 came cheap for them to get off the hook, kind of.

Frugal Bachelor
Frugal Bachelor
10 years ago

JD, So who IS paying you? There are ads on your blog for many different financial institutions, some of which are competing directly with the company which you are writing about. Presumably you have financial relationship with them, but I cannot find ANY of your financial relationship disclosed on your blog. You do an exemplary of avoiding paid links, like others bloggers fall into, and have a very high level of trust. But I still feel there is a certain level of transparency missing. For example, how would have handled the situation if it were with one of the companies… Read more »

JerryB
JerryB
10 years ago

One of my Credit Cards waived not only the interest but a late payment charge just by my asking. JD didn’t escalate his desire to have a refund on the charges. He was willing to accept the charges as a lesson learned.

Many companies watch blogs, Twitter and other social networking sites for negative information and work with those who raise the flag to resolve the problem. Take a look at http://consumerist.com/ and you’ll see that it’s fairly common.

Ben
Ben
10 years ago

Spoiler Alert!! J.D. will now have these little “problems” with a different company each week, culminating in a pleasant chat with a representative, and a new blog post recommending their service! C’mon J.D., the cat’s out of the bag….sigh, how much did Capital One pay you for this little farce?

……….j.k.

Ben
Ben
10 years ago

Ok, sorry I didn’t see #14, I’m seriously kidding about the above post. Love the blog…read it every day.

Bill
Bill
10 years ago

I would not have taken the refund. Pain causes learning, so are you still going to play with the snakes?

CMR
CMR
10 years ago

I think the real story here is that a Capital One employee actually reads JD’s blog! Maybe they just *have* to do it for keeping the peace, but nonetheless, it’s great because it shows that there are friendly and helpful people inside these big companies. I do like one of the other suggestions to start a fund / tracking list of people’s issues with getting service or addressing confusing parts of their personal finance journey. Mistakes that teach you lessons are quite valuable. But now we’ve all learned from JD’s mistakes and we don’t have to see the $25 charge… Read more »

Lissa
Lissa
10 years ago

I don’t think it’s a matter of your leverage; I think your average consumer *can* get change to happen. In my experience, you sometimes have to go up the ladder, be polite, firm, and repetitive, but it works.

~Lyn, who spent years in Accounts Payable doing this for a company, and thus is more comfortable asking over and over again.

Wes
Wes
10 years ago

Bully for them for giving you a ring. I don’t even know JD and I can get in touch with him whenever I want, so I don’t think that Kathy looking up his info is out-of-bounds. +1 for CO customer service. I own my own company and I have google alerts and twitter searches and all that to see what people are saying about me so I can keep people happy. JD: I didn’t take this as a shill for CO nor do I think you should have refused the refund. Sorry, if I made that mistake and figured out… Read more »

Brian Abbott
Brian Abbott
10 years ago

Thanks for posting the update. This is good customer service for Capital One to have done the refund. I have gotten many refunds from different companies, sometimes for my mistakes and sometimes for theirs. I think the bottom line is that customers want honest pricing and clear rules, and don’t want to feel like they got snagged by a fine-print “gotcha”. Companies know that most people either won’t notice the fee, or won’t complain about it. So when one of the few people do actually call, they might as well give a refund rather than alienate a motivated customer.

honeybee
honeybee
10 years ago

This stuff boggles my mind. I have no idea what any of that even means. I feel this ends up being the #1 reason I don’t have a CC. Not that I don’t have good willpower (I really do with these things…), but that I feel like I’m going to be cheated on one end or the other because I just can’t keep up with aprs, fees, special charges, all the fine print… just one more hassle in my life I don’t need.

Christine
Christine
10 years ago

I was relieved to see Claudio’s point. I work for a financial institution and what Kathy did is definitely a violation of client privacy.

J.D.
J.D.
10 years ago

For the record, I don’t feel as if my privacy was violated. I had e-mailed Kathy in response to her comment, and it was clear that I was willing to speak with her.

Joseph
Joseph
10 years ago

JD, I have made a few similar mistakes with several credit card companies (Discover, AMEX, Bank of America, Capital One) and every time I have asked for a refund of the charges (interest, and fees). I have been granted this request every time (noted blog not necessary). Any customer focused company would gladly refund a one time fee and finance charge for the stream of recurring revenue that they receive from merchants who accept your credit card. I can guarantee everyone one thing, you will not get a refund of the charges if you do not ask.

Shogun @ Financial Samurai
Shogun @ Financial Samurai
10 years ago

JF – I think JD can write whatever he darn pleases, even if he does have 70,000 readers subscribed. It’s called the 1st amendment, and freedom of speech!

If he recommends one savings strategy, and it doesn’t work for someone else, that’s too bad. No one forces a person to read JD’s site and take his advice. There’s no malicious intent, and JD is just doing what he thinks is right.

Cheers,

Shogun

Not My Mother
Not My Mother
10 years ago

I’ve stopped reading all the comments because the trolls are getting ridiculous but I will point out that in JD’s original conversation with the Capital One, THE CSO SAID IT WAS TWO-CYCLE BILLING. So fair enough JD didn’t get it right but neither did the Capital One representative he was talking to. As for whether his blog’s popularity got rid of the fee, sure it helped. But as JD pointed out himself Ramit would have been able to get the fee waived during the first conversation. So the blog doesn’t give him a total advantage over the blogless, it just… Read more »

Becky
Becky
10 years ago

JD…many of the comments here have been out of line lately, IMO. It is okay to accept the refund for the mistake. They are still making plenty of money and they get great PR from it. And you get forgiveness. I don’t think you are shilling for the company. (That was out of line, IMO). As to mistakes. So what? You are supposed to be “normal guy”. That’s why we LIKE YOU! You don’t “know everything” and are “learning as you go along”. The fact that you didn’t know this about c/c is something that obviously not everyone else knew… Read more »

April
April
10 years ago

“if…mainstream media published as many errors as you…you’d probably get sued.” That is the funniest thing I’ve read all week! In my news editing class, one of our daily assignments was to find errors (grammatical and factual) in three major newspapers–there were plenty. Also, I think the shilling comments are out of line. This is someone’s blog, so it stands to reason that he’s going to share his personal experiences. I’ve had bad experiences with Cap One, so I cancelled my card awhile back. They were one of the companies that, according to Maxed Out, like to give small lines… Read more »

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