Capital One Kind of Sucks

This has me over the edge -

Not too long ago I wrote about my experiences with Capital One here and here.

In January I asked for a higher credit limit on my newly acquired card because my initial limit is painfully low. I was denied a second time for an increase and this is the text of the letter they sent me explaining why:

"Thank you for your recent request to increase your credit limit. We regret that we cannot approve the requested change. The reason(s) for our decision are as follows:

Insufficient length of Capital One relationship

The profitability of your account at your current purchase rate

Your Capital One account is too new "

The first and last bullet are the same thing essentially - I haven't been a customer long enough. I have been a customer for six months though - and faithfully paid my bill in full every time, but I could almost concede that point.

But to deny me because of profitability of my account at my current purchase rate!?! What does that mean?

These are the only things that I can even guess:

1. I charge (modestly lately) on my account and pay it off every month. I never carry a balance.

2. I did request Capital One's "Military Rate" which allows me a substantially lower interest rate and waives several fees - but I never take advantage because I pay it off every month. Even their military rate is higher than the regular interest rate that USAA gives me so if I ever need to carry a balance - it won't be on this card.

3. Because I use it overseas, and Capital One is the only card issuer that doesn't charge a foreign transaction fee, they feel like I'm taking advantage of them and don't want to give me the chance to spend more of their money.

Regardless of the reason - this is ridiculous. I seriously considered canceling the card, but instead, I've decided to maximize the damage I can do.

Since they give me back 2% on gas and grocery purchases and they don't charge that foreign currency transaction fee, I will use this card to purchase only gas and groceries - and only overseas. I will continue to pay it off every month and I will cash out on the cash rewards as soon as humanly possible. Possibly monthly with the way we go through gas and groceries.

The downside is that charging near the top of your spending limit (and in this case that is pretty easy to do) is actually bad for your credit score. But I'm not planning on making any major purchases in the next few months so I think I'll be okay. With the current exchange rate against the zloty - their meager exchange rate is probably enough for just our gas and groceries.

I think I'll be much happier with sticking it to Capital One (vice jsut cancelling the card) until they up my limit. I say beat 'em at their own game.

And of course the story is not over. I've sent a letter to Capital One under the Fair Credit Reporting Act, asking them to clarify the reasons for denial. I've specifically asked if the account is not profitable because I don't carry a balance or because of the low interest rate. I'll post any updates as I get them.