It appears that Capital One is the latest lender relying on predatory tactics to encourage its consumers to incur penalties and fees (and therefore boost its revenue). 

Read the story here...

Recently, Capital One has drawn sharp criticism for its practice of issuing individual consumers multiple credit cards with very low lines of credit. As this BusinessWeek article makes clear, Capital One’s business model appears to split a consumer’s potential line of credit into small segments of credit, with the end result being numerous cards that, in the aggregate, amount to the full extent of that consumer’s creditworthiness. Simply put, this practice maximizes risk to the consumer by increasing the possibility of overages and duplicating other penalty fees. This is yet another good indication that the credit industry derives its profits primarily from fees and penalties, with the end result being a system that deceives consumers and encourages their misunderstandings and mistakes.

As might be expected, the BusinessWeek story drew the standard ire of the individual responsibility/libertarian crowd: in a nutshell, the counter-argument that consumer mismanagement of personal debt is due to individual bad habits, and therefore we shouldn’t be concerned about Capital One’s efforts to artificially exacerbate such problems.   

Regardless of the merit one places in that argument – and I, for one, obviously don’t give it much credence – Capitol One certainly can’t boast of clean hands.  Read through thousands of examples of its customers’ complaints at the Better Business Bureau, (an interesting source, as Capital One has attempted to leech the goodwill of the BBB), ConsumerAffairs.com, My3Cents.com, or Rip-offReport.com.  The company has even earned a bluntly-titled Capital One Sucks! website. 

Are we to believe, then, that all of the consumers are wrong – that it’s all about bad habits, and not at all about bad practices that prey on or encourage bad habits?