Capital One-High Interest, High Credit Limit, but very low salary

[drumlord]

Hi,
Can anyone help/advise please?
Basically, my wife has had a Capital One credit card for several years.
Capital One have increased her card limit to £5700, even though she earns under £4000 a year. Coupled with this,they have never changed the interest rate, (which is high, around 34%).
The end result was that the maximum limit was almost reached with a net result of minimum payments of around £130 having to be made, most of which went to interest charges. Finally, we had no choice but to take a loan out to repay what was owed.
We have never disputed what was spent on the card, only the high rate and credit limit.
Letters to Capital One fell on deaf ears and our complaint to the Financial Ombudsman Service was rejected, by quite frankly someone who did not understand the points we were trying to make.
Capital One offer various cards at various rates. The card my wife had is aimed at people who want to rebuild/establish a good credit history. How long does this take in Capital One's view?
On the basis that they regularly increased my wife's limit, the assumption would be that they were happy with the account and the way it was being run, ie a good credit history had been achieved At this point , even retrospectively, the account could, arguably should have been switched to one bearing a lower interest rate, (the other cards are around 18%).
In total, around £5000 in interest alone has been repaid.
If members think I/we are being unreasonable, then fair enough, our action against Capital One will cease. If the consensus is that we are right to feel aggrieved and anyone has either similar experiences or constructive advice, we would love to hear from you.
Many Thanks
drumlord

[Ruby]

Re: Capital One-High Interest, High Credit Limit, but very low salary

I think that credit card companies 'assume' that people will not be loyal and will swap to other suppliers within a period of time to a better rate of interest. The fact that your wife gets regular credit limit increases indicates that her credit score must be fairly good. In which case rather than fighting with Capital One, shop around for a better rate with a different credit card company and do a balance transfer. You will probably find that once the account has been settled you will get offer letters from Capital One offering a better rate of interest, a bit weird perhaps but that is how the credit card industry works.

[drumlord]

Re: Capital One-High Interest, High Credit Limit, but very low salary

Many thanks for your quick reply. Makes sense, but still leaves Capital One a lot of explaining to do regarding their actual setting of limits/interest rate adherence.

[stevemLS]

Re: Capital One-High Interest, High Credit Limit, but very low salary

Am not sure they have any explaining to do tbh, your wife signed up for a card at that rate.

Did she ever apply for one of the lower rate cards before you started the current complaints?

[Ruby]

Re: Capital One-High Interest, High Credit Limit, but very low salary

In my experience credit scoring is what gets you credit cards/loans etc not your actual wage/salary. If your credit score is high but your income is low it still means that you are able to pay your debts on time one way or the other. I don't think the financial industry pays much interest to peoples salary when assessing credit limits/risk - odd, but true.

I would recommend cutting your losses and your wife applying for a different credit card, hopefully she will be eligible for one with a 0% balance transfer which will have a good impact on the back pocket.

[drumlord]

Re: Capital One-High Interest, High Credit Limit, but very low salary

Thanks again for taking the time to reply with a lot of common sense.
Lots more I could add regarding our situation, but at this stage I don't want to bore everyone.
However, I will fill in some of the details when I reply to another member in the thread.:tinysmile_twink_t2:

[drumlord]

Re: Capital One-High Interest, High Credit Limit, but very low salary

Thank you for your reply.
Yes, she would have signed on the dotted line, and yes she did not have to use/spend the limit up to the maximum on her account..
However, I would, and am concerned how a credit limit can be increased by almost 600% with no material change in financial circumstances, (unless you count a better credit history, and if so when does this lead to a lower rate?).
No application was made to apply for a lower rate card, which again I concede should have been done, but for the record, we have since applied informally, only to be told that there are no cards available to us. This was later changed to not everyone can be accepted for our cards should we decide to apply.
Does it not show double standards if Capital One were happy to take our money at 34%, but show an extreme reluctance to do so at 18%?
Although obviously different from the PPI issue, the amounts are often ones that increase over time, rather than being fixed and can also tend to be far larger.
I remain highly concerned that thousands of customers, particularly vulnerable ones on low incomes are caught in this spiralling trap of high interest rates/inflated credit limits.

[nemesis45]

Re: Capital One-High Interest, High Credit Limit, but very low salary

It will be the " usage of available credit" that is influencing credit decisions, so applying for a zero % balance transfer and a " revised" credit limit ( higher) thus increasing debt.
If one seen to be at the upper limits of credit available applying for more credit is likely to be unacceptable to lenders.
Personally I cannot see that Cap one is at fault.

[wales01man]

Re: Capital One-High Interest, High Credit Limit, but very low salary

When a Credit Card limit is increased the customer is no forced to spend up to the limit?
The interest is in the original application and when an interest rise is advised the customer can stop using the card and pay of the debt ?