Is Capital One Bank A Liar? The Truth About Its High Yield Checking

Whats the problem with this ad?

It makes you believe that you consistently receive 5X the national average for interest paid on your checking account.  When you look at the fine print however you will find that all may not be as it seems.

First off the offer is only good for 365 days, after which point the rate drops.
 
  To see a list of high yielding CDs go here.  

So What is Really Going on Here?

Interest rates on savings and checking accounts are at 28 year lows, currently around .2%.  This means that Capital One’s 5X’s the national average rate is currently around 1%.  So basically for an extra .8% they get you to move your account from your existing bank to Capital One.

Moving your checking account is a hassle for most people because of things like automatic bill pay and direct deposit.  With this in mind Capital One is betting that after the first year when their teaser rate drops, most people will not want to go through the hassle of moving their account.
 

What Happens after the Initial Period?

They offer a “competitive rate” which could mean really anything.  The current rate that you would receive if your 365 day offer expired today is 0.40%, or 60% less than their advertised rate.
 

Other Catches?

  1. You need to open your account with at least $500 AND keep an average balance of $5000.
  2. The rate only applies up to $100,000.  After $100,000 the introductory rate is currently .6%.
  3. Offer not available to existing Capital One clients.

 

What do we recommend?

When asking about rates for your checking account or any other interest baring account, make sure you have the full picture.  Make sure the rate that you are being offered is not simply an “introductory” rate to get you hooked on their bank before dropping to a much lower rate after a period of time.

A good way to go about this is to see what they are offering to their existing clients who have been with their firm for an extended period of time.

Best CD (Certificate Of Deposit) Rates

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Comments

  1. eroteme says

    Don’t see the problem. The add says 5X higher than the national average interest is guaranteed for one year. It may be a problem for those who can barely read, or those who cannot understand what they read.

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