What’s In Your Wallet? A Capital One Nightmare for Low Income Consumers!
ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest. It has been investigating Capital One’s actions against consumers who are unable to pay their credit card debts.
What ProPublica found is disturbing. Capital One files more lawsuits against their cash strapped consumers than any bank in the nation. In fact, by their estimates, about 40% of all credit card lawsuits than any other creditor. That is despite being the fourth largest lender in the nation.
How Little Capital One Will Come After You For
The amount they sue people for is typically as low as $1,000. The typical suit is for $1,000 to $1,500 dollars which is far lower than most other banks. That has also been my experience with my bankruptcy clients.
The customer, or victim depending on how you look at it, is typically low income earners who have the hardest time making the monthly payments or being able to pay off their debts in full. Capital One targets low income borrowers who live paycheck to paycheck to market to.
Capital One, according to ProPublica, sued and got judgments against people living in black neighborhoods at almost double the rate as in neighborhoods that were predominately white.
One of the major problems are that they deliberately extend credit to people who are poor credit risks. Then they often charge very high interest rates of as much as 25%.
Capital One In Action
In my Sacramento CA bankruptcy law firm Capital One lawsuits are often the straw that broke the camel’s back for my low income clients. The consumer will get a card and then use it, which is expected. However, they find themselves in debt to Capital One in amounts they simply cannot pay.
I tell my clients that banks and credit card companies really do not want them to be able to pay the credit card off. They do not make money that way. What the banks and credit card companies want is to trap consumers in a never ending cycle of minimum payments, so they can collect as much money as possible for as long as possible. Essentially they want to make the people who are most at risk and have low incomes their “cash cow” to milk for as much as possible for many years to come.
What I often see in my office is people who, if they were able to pay the debt on the credit card down, they then had to use the card to pay for necessities of life. There is no getting out of the hole that the credit cards helped them to dig.
Worse yet, if a consumer is late on their payment they are hammered with high “late charges” and often “over limit” fees. That can double or triple the actual rate of interest from 25% to 50% and even as much as 75% yearly interest rates. This is an amount the consumer simply cannot solve for lack of sufficient income. Anything, like temporary loss of a job or layoff or expense such as medical bills or car repair can derail the consumer’s ability to make the payment. At that point the debt snowballs and quickly becomes uncontrollable.
While the above Is true as to all credit cards, payday loans and personal loans from companies charging high interest rates, Capital One is the most common one I see with my clients.
Given the aggressive collection tactics by Capital One, “what is in your wallet?” may be a Capital One nightmare.