Capital One is facing legal action from customers who allege they were earning a mere 0.3% interest on their ‘360 Savings’ accounts, significantly lower than the more than 4% they believed they should have been receiving.
As the Federal Reserve increased interest rates, these account holders claim that Capital One failed to raise rates accordingly, resulting in substantial financial losses.
Interest Rate Discrepancy:
Savers with ‘360 Savings’ accounts contend that Capital One neglected to inform them about freezing interest rates at 0.3% while introducing a new account, ‘360 Performance Savings,’ with considerably higher rates.
The bank allegedly kept existing customers’ deposits in the low-interest ‘360 Savings’ accounts, leaving them unaware of the more lucrative alternative.
The lawsuit asserts that there were no substantial differences between the two accounts other than the interest rate.
Industry Context and Customer Confusion:
While other banks adjusted interest rates in line with the Federal Reserve’s benchmark rates, Capital One’s alleged actions led to confusion among customers.
Online expressions of confusion and frustration highlight the disparity between advertised rates and the actual interest earned by account holders.
One plaintiff, Samuel Hans of Illinois, claims to have lost over $1,000 in interest between September 2019 and May 2023.
Hans asserts that when he contacted Capital One seeking backdated interest, the bank refused, placing the responsibility on account holders to monitor and ensure optimal interest rates.
The lawsuit was filed in the US District Court for the Eastern District of Virginia, with a hearing scheduled for February 14, 2024.
Capital One’s Response:
Celia Edwards Karam, president of Capital One’s retail bank, stated to the Wall Street Journal that the bank aimed to simplify its savings offerings over the years, inheriting various accounts through multiple acquisitions.
The bank maintains that the annual percentage yield on the ‘360 Savings’ account was disclosed in monthly statements to customers.