Capital One Bank Sued Over Allegedly Unauthorized Credit Card Interest Charges

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A proposed class action lawsuit alleges that Capital One Bank (USA), N.A. fails to disclose to customers that all new credit card purchases may be immediately subject to interest if any previous balance was not paid in full.

According to the case, Capital One promises in contracts and monthly statements that cardholders will receive an interest-free grace period to pay their account balances. If customers leave a remaining balance unpaid after a billing period due date, however, their grace period is allegedly taken away without warning and interest will accrue on all future charges—not just unpaid ones from the previous billing cycle. From the complaint (emphasis added):

“Without notifying consumers, Capital One eliminates the grace period for all new purchases if a consumer does not pay off her entire statement balance in a given month. If a consumer leaves even $1 on her account balance after a billing period due date, Capital One eliminates the grace period for all subsequent new purchases—even for new purchases fully paid off by the next billing cycle’s due date.”

Thus, consumers are charged interest on purchases that are fully paid by the date listed on their billing statement, the case says, contrary to their “reasonable expectations” and the terms of their agreement with Capital One.

The suit, which has been transferred from Massachusetts to Virginia federal court, seeks to enjoin Capital One from applying interest to amounts that are paid on time, arguing that the defendant is not contractually authorized to do so.