I remember getting a Capital One card in the 1990s with a $300 credit limit and thinking it was a joke – I did not have any cards with limits under $1,000. I also remember being told by someone that Capital One was a subprime credit card company and using their card was the equivalent of telling someone you had bad credit. The only reason I had even applied was because I received offers from them in the mail all the time.
In 1994, Richmond, Virginia-based Signet Bank launched a spinoff company called Oakstone Financial Corporation; a year later, Oakstone changed its name to Capital One. Throughout the rest of the 1990s, Capital One was a bank that issued credit cards to people who couldn’t get cards from better banks. They had higher interest rates and annual fees – they were like Providian. In the early 2000s, Capital One started expanding beyond credit card issuance and working to improve its image and become a “prime” bank. I was living in New Orleans, Louisiana when Capital One acquired Hibernia Bank, one of the largest banks in Louisiana and a bank I had accounts with. Louisiana is among the states you will find Capital One Bank branches.
In 2012, Capital One bought HSBC’s U.S.-credit card portfolio. Part of that portfolio was Orchard Bank, which issued secured and unsecured credit cards. Anyone with credit issues or who needed to build credit in the 2000s probably had heard of Orchard Bank. If you were not approved for an unsecured credit card with them, Orchard always offered you a secured card. When Capital One completed its takeover of HSBC, Orchard Bank began being eliminated. Capital One launched its own secured card in its place, which became being the Capital One Secured Mastercard. If you are rebuilding your credit and need a credit card, Capital One’s product is a good one overall.
A bit of advice…if you go with Capital One, have your s**t together. They may not want to look like a sleazy sub-prime credit card issuer anymore but they haven’t become soft or flexible with their policies. Capital One is unforgiving of those who mess up their accounts and they report negative accounts in a way that hits your credit the hardest and for the longest time. I am a master at removing bad accounts from credit files and Capital One is virtually impossible to remove by any means. They keep excellent records on all of their accounts, so getting them deleted on a technicality is very unlikely and they will always respond to disputes. I recently prepared letters for someone with three charged-off credit cards on his credit reports – two from retails stores issued by Comenity Bank and one with Capital One. My letter, a goodwill letter, offered to pay the balances on each account in full and explained the circumstances that resulted in the months of non-payment (hospitalization due to an automobile accident). We received letters in response from all three. With Comenity, he had only ever charged $29 on one account and $45 on the other but the balances were both almost $300 due to fees. I offered payment in full in my letter – it was worth it if it got rid of the charge off. The letters from Comenity, however, adjusted the balances to remove the those fees; in addition, Comenity agreed to delete both accounts as soon as they received payment for the $29 and $45.
Capital One, however, had a much different response. The account I wrote them about had been a secured card – secured by $700 he had put on deposit. Presumably due to fees, etc., the balance had swelled to over $1,200. Again, my letter offered payment in full in return for deletion of the charge-off. In response, Capital One provided him with a phone number to call to discuss payoff and resolution of the account. They said paying the balance in full would certainly look good if they decided to consider deleting the account in the future but they would not commit to doing anything though. The account remains on his credit report.
Pay your account on time, keep your credit under the limit, and don’t have any returned payments and you will be fine.
Capital One also won’t require you pay the full amount of the credit limit as the deposit. For $49 or $99, you will get at least a $200 credit limit which you can increase in $100 increments whenever you want. From the time you do the application it will likely be three weeks or so before you actually get your card. When they say ten business days for the ACH from your bank account to post, they mean it. Supposedly, Capital One may increase your credit limit at some point without you making an additional deposit. I have read on several sites lengthy complaints from people about this not happening for them. It’s a secured card people – if you get a credit limit increase, cool. If not, send in some more money and increase your limit yourself. That’s what you should expect with a secured card anyway. Besides, if Capital One does do it, it won’t be for more than $100.
They have a great website and phone app for making your payments, which post in a day or two. My experience with them has been great so far.
Roots, Credit & Life 