How long have you been with your current bank?
Do you even remember why you opened an account with that bank in the first place?
For many of us, we opened our first “adult” bank accounts in our 20s. We probably just picked the closest bank to our apartment. I doubt many of us (myself included) put much thought into who we banked with.
Because it’s human nature to resist change, I’m guessing many of us have never thought about whether that bank is still a good fit at the current stage of our lives.
In light of Capital One’s massive class action settlement based on allegations that it deceived its customers, now seems like as good a time as ever to revaluate who we bank with.
More on the settlement below.
First, a little personal context about why I’m thrilled that Capital One is not getting away with its deceptive scheme.
I banked with Capital One for many years.
For a long time, I used Capital One for all my savings accounts. When I started law school in 2006, there was a Capital One cafe right next to my school.
You could get a cup of coffee for $.75 and talk to a banker at the same time. It was a cool concept and convinced me to bank with Capital One.
I told everyone about how great Capital One was. I had Capital One savings accounts and a Capital One credit card. You could say I was a huge Capital One fan.
Key word: was.
In November 2023, I had been a loyal Capital one customer for 17 years. This was during the time period when interest rates on savings accounts were rising dramatically.
Many banks were advertising rates as high as 4% or 5%, which were higher than most of us had ever seen.
One day that November, for whatever reason, I logged into my Capital One account to see what rate I was earning.
I was sure it would be in the 4% range, and probably closer to 5%, since Capital One was a leader in online banking.
When my statement loaded, I was shocked.
0.30%!
Shocked probably isn’t the right word. I was disgusted.
0.30% in 2023 might as well have been 0.0%.
I refused to believe that a bank that I had banked with for 17 years could do this to a loyal customer.
What the heck happened?
Well, Capital One, unbeknownst to me, switched my savings from its high interest platform into an account with the much lower interest rate.
At the same time, Capital One was still advertising and offering top rates to new customers.
When I discovered the sneaky switch, I immediately closed all of my accounts and transferred my money to a new bank. I no longer have a Capital One credit card, either.
It wasn’t the amount of interest I lost out on that bothered me.
This all happened during that time when my wife and I were aggressively acquiring properties, so we never had a lot of money sitting in savings for an extended period.
So, my anger wasn’t just about the interest.
For me, it was about the principle. I don’t want to have any relationship with a bank that would do that to its customers, especially long-term customers like me.
I did a quick search in my inbox and found a Capital One statement from December 2022 showing a 0.30% interest rate. That means Capital One had deceived me for at least a year before I caught on.
I have to admit that writing this post is reopening old wounds. Although, learning about the settlement definitely helps.
I am happy to report that Capital One did not get away with it.
It wasn’t just me who was getting ripped off by Capital One.
I am one of the many people that Capital One switched out of high interest rate savings accounts into inferior products.
These deceptive practices were subject of a federal lawsuit brought by the Consumer Federal Protection Bureau.
Additionally, disgruntled customers filed a class action lawsuit to recoup the interest that people like me missed out on.
All is well that ends well, right?
I am pleased to share that Capital One agreed to a $425 million class action settlement for its deceptive practices.
A court hearing for final approval of the settlement has been scheduled for November 6, 2025.
If you are, or were, a Capital One 360 Savings account holder at any time from September 18, 2019, through June 16, 2025, you are automatically eligible for benefits. You do not need to fill out a claim form.
Note: if you’d like to update your mailing address or receive an electronic payment, you can do so here.
What are the terms of the settlement?
According to the Notice of Settlement:
Capital One shall pay $300 million, to be used to make pro rata payments to settlement class members relative to the approximate amount of interest each settlement class member would have earned if their 360 Savings account(s) had paid the interest rate then applicable to the 360 Performance Savings account.
Translation: if you had a Capital One 360 account, you are going to be paid “some” of the interest you were owed.
The reason I say “some” is because of the word “relative” in the above paragraph from the notice.
Capital One allegedly cheated customers out of $2 billion in interest. The settlement is for $425 million. Based on that discrepancy, it does not appear we will get all of the interest we are owed.
Hopefully, I’m wrong about that and we all receive the full interest we are owed.
Disclaimer: I am not involved in the settlement negotiations and this is not legal advice.
If you remained a customer, you will receive an additional settlement amount:
The second component consists of $125 million, which will be paid by Capital One as additional interest payments to settlement class members who continue to maintain 360 Savings accounts (presently approximately 3/4 of the settlement class). In order to accomplish such additional interest payments, Capital One shall maintain an interest rate on the 360 Savings account of at least two times the national average rate for savings deposit accounts as calculated by the FDIC.
Translation: If you continue to bank with Capital One, you will receive some additional money. How much you’ll get is complicated.
By the way, I am happy to learn that customers who stayed with Capital One despite its deceptive practices will earn some additional money.
In the end, regardless of how much we receive, this news makes me very happy.
I don’t really care about the payment at this point. I’m happy that Capital One isn’t getting away with its deceptive practices.
And, I’m happy that news of the settlement serves as a good reminder for all of us to evaluate our current banking arrangements.
Even with the settlement, I still won’t bank with Capital One again. I cancelled my accounts as soon as I learned that the bank was ripping me off.
Maybe I’m being childish, but I still refuse to give my business to a company that blatantly deceives its long-time customers.
Why do stories like Capital One’s deceptive practices matter?
The lesson here is that we all need to regularly evaluate our banking relationships. There is no such thing as “set it and forget it” when it comes to our money.
You could say stories like this are good reminders to regularly think and talk about money.
The last thing any of us needs is to be tricked by our own banks. The more we talk about what’s going on, the better chance we will catch these schemes before it’s too late.
The point is: no matter how much you trust your bank, keep an eye on your accounts.
No, I am not so cynical that I think all banks are out there intentionally ripping us off.
However, massive scandals like this are not the only red flags to look out for. Banks notoriously have hidden fees and confusing rules.
If you are not paying attention to your money, you may be unknowingly paying fees or missing out on better opportunities. It’s up to each of us to regularly evaluate whether our bank is continually providing us with the services we need.
Are you a current or former Capital One customer?
If this is the first you’re hearing about Capital One’s deceptive practices, will you continue to bank with them?
Let us know in the comments below.