The answer the big credit-card purveyor wants to establish in people's minds is: lots of Capital One credit cards.
Because the more of its cards it puts into people's wallets -- especially poorer (or subprime) people -- the faster it can start charging overlimit and late-payment fees. A recent story in BusinessWeek explained Capital One's modus operandi: It offers consumers MasterCard and Visa credit cards with low credit limits. When a cardholder exceeds the limit, Capital One sends out solicitations for another card. And when the borrower goes over the limit again, he's offered another card.
As BusinessWeek said: "By offering several cards with low limits, instead of one with a larger limit, the odds are increased that cardholders will exceed their limits, garnering overlimit fees. Juggling several cards also increases the chance consumers may be late on a payment, incurring an additional fee. And if cardholders fall behind, they pile up overlimit and late fees on several cards instead of just one."
Another ploy used by Capital One is to claim it didn't receive a cardholder's payment on time, triggering late fees. One person told me that Capital One contended her payments didn't arrive in time for "posting" in the previous month's pay period. Not in her wallet anymore: a Capital One credit card.
It's not surprising, in view of the above, that Capital One's "assaulting Vikings" TV spots seem to be in retreat. Those are the ones that show marauders -- who represent high-interest rate cards -- about to come down on a hapless consumer until he whips out his "no-hassle" Capital One card. Later spots showed the Vikings trying other lines of work because everyone was using Capital One cards.
David Spade, of course, put Capital One ads on the map. He was the guy forever saying "No" to non-Capital One credit-cardholders who wanted to use their free airline miles for trips to exotic and nonexotic places.
No blackout periods
If I were Capital One, I'd keep pounding away at the comparatively safe claim that its credit cards don't have blackout periods. The latest incarnation shows a family jumping on a freight train. Two vagabonds already occupy the car, and one says, "Couldn't use your credit miles, eh?" The dad replies, "Yeah, they blacked us out." "You should switch to Capital One," the vagabond replies. Then, the super: Capital One cards have "no blackout dates, no earn caps, no miles expiration."
The Minnesota state attorney general last year begged to differ with the Capital One TV spots touting its low interest rates. "Capital One aggressively markets its brand image as the credit-card company with the lowest fixed rates," said Mike Hatch. "But that image is false. If you do something as simple as pay a day late, your rate with Capital One can skyrocket overnight."
So it's prudent to take the safer road, especially with a blog out there in cyberspace called "Capital One Sucks." The reporter from BusinessWeek used the site to solicit Capital One customers with three or four of its credit cards with low credit limits. The two people he cited as examples in his story, as it turned out, had six and seven Capital One cards.
Free miles of little use
I would imagine that most of Capital One's subprime customers, especially the ones trying to juggle their debt over four or five credit cards, wouldn't have much use for the free miles they earn for overusing their cards (unless they want to run away and hide).
But at least it's something positive Capital One can say about itself, however flimsy, without incurring the wrath of their customers and state attorneys general.