Capital One "High-Yield" Savings Account: Did You Lose Out On Interest Payments?

Capital One is being sued for cheating customers out of two plus billion dollars in interest payments on their savings accounts by the Consumer Financial Protection Bureau. What is happening? Hello Member Super Savers and Bond Course fans. I hope you're healthy and well. So earlier this week the Consumer Financial Protection Bureau, the CFPB, issued a statement that it was suing Capital One because the bank unlawfully misled consumers about its 360 savings accounts and obscured its higher interest savings products from them. Given that quite a few of our Diamond Nest Egg regulars bank with Capital One, as do some in our own family, and also because I actually had a conversation with some of my clients on this topic a few years back, let's talk about what's going on, whether you may be impacted or might even be entitled to some belated interest payments, and what happens next. As usual here's a front of video disclaimer. For a detailed disclaimer please refer to the end of this video. Let's dive in now folks. As some of you may recall a few years back Capital One's flagship savings account was its 360 savings account. This is not to be confused with its current flagship savings account, the one that is now on its website, the 360 performance savings account. And yes, its current 360 performance savings account has a very similar name to the old 360 savings account, which brings us to why the CFPB is suing Capital One. According to the CFPB, Capital One promised consumers that its old flagship 360 savings account offered one of the best and highest interest rates in the country, despite keeping the rate on the 360 savings account artificially low, even as the Fed kept raising interest rates. Last summer for example, quite a number of banks, many of which we shared on this channel, had rates 5% or higher on their high yield savings accounts, after the Fed had raised rates above 5%. Well, Capital One's 360 savings account with the best and highest rates in the country remains stuck at an APY of just 0.30%. But it doesn't appear to have stopped at just the alleged not exactly true marketing. It gets worse. Remember this Capital One 360 performance savings account that I just showed you? Well, not only does it sound like the 360 savings account the CFPB is currently suing Capital One about, it also pays quite a bit more interest than the old 360 savings account. Capital One actually kept raising the rates on its new 360 performance savings account in line with the Fed and many of its competitors, while keeping the rate frozen on its old 360 savings account. So at one point in January 2024, despite very similar names and features, such as no fees and no minimum balances, the new 360 performance savings account was paying around 4.35%, while the old 360 savings account stayed at a measly 0.30%. And the worst part, based on the CFPB's findings, is that when Capital One launched this nearly identical product, they seem to not have told their existing 360 savings customers. Rather, the CFPB alleges that Capital One obscured the new product from its 360 savings account holders and cost millions of consumers more than $2 billion in lost interest payments. The CFPB's lawsuit seeks to stop the company's unlawful conduct, provide redress for harmed consumers, and impose civil money penalties, which would be paid into the CFPB's Victim's Relief Fund. The CFPB is suing Capital One for cheating families out of billions of dollars on their savings accounts, said CFPB Director Rohit Chopra. Banks should not be baiting people with promises they can't live up to. This one really stood out to us because, as I mentioned before, in 2020 during the pandemic and not long after Capital One launched its 360 performance savings, we did have clients who asked us about the difference between the 360 savings and the 360 performance savings accounts, and I remember speaking to someone at Capital One, and the best answer I could get at that time was that one of them was new. Since our clients ended up opening accounts with another bank, I didn't really think much more about this at the time, other than the fact that they probably should have chosen a less similar name for the new account to avoid confusion. Seems the CFPB thinks the same thing at the moment. Do you know if you had a 360 savings account or a 360 performance savings account with Capital One at the time, and were you a part of this Capital One saga? Drop a comment below and let me and the community know. For those of you who may be curious though, here's the current rate on Capital One's 360 performance savings account. The old 360 savings does not seem to appear anywhere on their website anymore. And here is the rate on their CDs. They've come down quite a bit since last year and are not super exciting relative to some of their competitors and what treasuries and agencies are paying at the moment. And because I know some of you will ask, no, Capital One is not a GSIB, a Global Systemically Important Bank. According to the FDIC, however, in terms of total assets, as of September 30th, 2024, Capital One is still the ninth largest bank in the United States, just behind Goldman, PNC, and Truist. Also, this lawsuit by the CFPB does not impact FDIC coverage at Capital One. In fact, it will impact very little at the moment. From the Associated Press, in response to the CFPB lawsuit, Capital One said that it strongly disagreed with the CFPB's allegations and plans to vigorously defend itself in court. The banking giant added that it was deeply disappointed to see the CFPB continue its recent pattern of filing 11th hour lawsuits ahead of a change in administration. Capital One also maintained that all of its 360 banking products offer great rates and have always been available in just minutes to all new and existing customers without any of the usual industry restrictions. And to Capital One's first point here, it does indeed seem that the CFPB has been on a bit of a mission in recent weeks. On January 7th, it sued Experian for sham investigations of credit report errors. On January 6th, it sued Vanderbilt for setting borrowers up to fail in manufactured home loans. And just before Christmas, it sued JPMorgan Chase, Bank of America, and Wells Fargo for allowing fraud to fester on sale. So, with the incoming administration's eye on changes to the CFPB, or even potentially on abolishing the CFPB, as I explained in this recent Trump and FDIC video, linked below in the first pinned comment, all of these recent lawsuits by the CFPB could either drag on for quite some time, be dropped, or eventually come to naught otherwise. And as always, we'll stay on top of things here at Diamond Nest Egg and keep all of you informed on how it all will progress and whether some of us might even be entitled to some belated interest payments from Capital One. As for us personally, our kids still have their 360 performance savings account with Capital One. And if you're currently with Capital One and don't know what type of savings account you have there, it may make sense to double check that your savings account is indeed the newer, higher-yielding 360 performance savings account rather than the older, lower-yielding 360 savings account. All right, Members, Super Savers, and Bond Course Fans, I hope you enjoyed this video and learned something new. And as always, if you want to really get up to speed on bond investing and building out your bond portfolio while rates are still quite attractive, then check out this video here on our beginner and intermediate level bond courses, which we are in the process of updating. Use coupon code BONDS2025 to get an additional 10% off of our popular bond course bundle before the end of January. The 10% coupon code BONDS2025 can also be used to purchase Bond Beginners or our intermediate level course, Bond Masters, individually. And as a reminder, our next Bond Beginners live course session will be on Sunday, January 19th at 5 p.m. Eastern Time, 2 p.m. Pacific Time. We'll be diving deeper into this month's 20-year t-bond and 10-year tips auctions. And our next YouTube Member Live will be on Sunday, January 26th at 5 p.m. Eastern Time, 2 p.m. Pacific Time. We'll be diving deeper into this month's upcoming 2, 5, and 7-year treasury options and all things fixed income. I've also linked all the details on our bond courses and YouTube Super Super Saver membership below this video for your convenience. See you again very soon with more brand new wealth building content for your financial journey.