Fixed Rates Not So Stable

As money manager for her young family, Nicki Bourgeois is always bargain hunting, which is why Capital One's "no hassle" credit card ads caught her eye, with their 4.9 percent fixed rate.

But before transferring her debt, she called to make sure.

She says she was told by Capital One "that it was a fixed rate and it would not move. It would remain at that fixed rate until paid in full."

Or, as CBS News Correspondent Cynthia Bowers reports, until Capital One changed its mind. Last March, in the space of a month, the interest rate tripled to 14.9 percent.

"They said that I had made a late payment," says Bourgeois.

But there was no mention made about a late payment.

"Nope, all we have is an explanation here," says Bourgeois. "We'd broken a rule."

Minnesota's attorney general Mike Hatch says Capital One's the one breaking the rules.

"It seems to me if you're going to say it's a fixed rate, it ought to be fixed," says Hatch.

Capital One's estimated $1 billion ad blitz has turned the 10-year-old company into a major player in the credit card industry. Now Hatch has filed suit against the credit card giant for misleading consumers.

"What they're not telling these people is, 'We've put in there a number of trip wires and sometime during the next two years you're going to hit one of those and 40 percent of you folks are going to be paying a higher interest rate,'" says Hatch.

Citing the lawsuit, Capital One declined an interview request for this story, but did point out in a statement, "that every customer gets basic information about how to avoid fees, keep within their credit limit and understand how the annual rates are applied."

And if you stop the ad and look really closely, there is a disclaimer saying, "The terms can change at any time."

What's more, many card companies now make a practice of running monthly credit reports on their customers, and if they think someone's getting in trouble with any creditor, they can raise rates with no warning to protect their bottom line.

"Credit cards are the most risky kind of consumer lending that any bank could provide," says James Chessen of the American Banking Association. "They're unsecured, we never meet the party that we are lending to on those credit cards."

The Bourgeois' closed their Capital One account, and have found other solutions to their financial puzzles.

And the lesson they hope people learn from their experience: "Don't always believe what you see or hear," says Nikki Bourgeois.