The Latest Credit Card Gotcha from CapitalOne

Watch out for a new credit card iniquity -- the suspension.

I may be one of the first victims, because I've never heard of this before. It all started last week when a ticket-dispensing machine refused to accept my CapitalOne card for a trip to Grand Central; I figured that the machine was temperamental. Then, a day or so later, the card refused to work when I tried to buy a subscription online. There must be a problem with the software, I thought. A few hours later, however, when I visited a bricks-and-mortar store and tried to charge $67, I was declined. "Try it again," I told the saleswoman. Declined again.

I was perplexed -- and a little hurt. I rarely use my CapOne card, and it almost never has a balance of more than $200. Why was it trying to humiliate me?

So I went home and got a CapOne rep on the phone to explain. He told me that my account was suspended. Suspended? What the hell? Seems that I was 13 days late in paying the $146 balance on my last statement. Until I coughed up the minimum payment -- about $10 -- I was in financial purdah. "When you repay, we'll reactivate your account," he said.

I took a look at my bank account. Turns out that I'd goofed. I'd recorded a payment of $146 to CapOne in my checkbook but had failed to type in the amount and click "pay." Of course, now I owed CapOne not only $146 but also a $29 late fee. I sent in the dough, and that was that.

But as I mulled the incident over the weekend, another thought came into my head, namely, "Whaaaaa?" Generally, a credit card company does not bar you from charging anything ever. After all, the more, you charge, the more it earns. The company even rakes in money when you miss a payment, as I did, in the form of a $29 fee. Only if you're 60 days past due on a payment or verging on your credit limit does a card company get nervous and shut off the spigot of money. My outstanding balance of $146, however, was nowhere near my $15,000 credit limit.

So I called CapOne again and this time spoke to an account manager. She was as befuddled as I. "You have an excellent record," she exclaimed, making me glow with credit-card company love. She also studied the cardholder agreement but couldn't find anything about suspensions. Finally she decided that this wasn't really a suspension. "There must be a hold on the account for fraud," she said. So she put me in phone limbo while she talked to the fraud folks.

A few minutes later, she came back on the line. "It's not fraud," she said. "It is a suspension." Even if you are one day past due now, she reported, CapOne may suspend your account. "They're just so nervous because of the economy being so terrible. There have been a lot of defaults."

So what's the takeaway? With its suspension CapOne was insinuating that even though I was late on a lousy $146 balance, I might go on a $14,000 binge and then file for bankruptcy court where I could wipe out all my debts and leave CapOne holding the bag. Pretty insulting.

But then I realized that the CapOne's skitishness says more about its own finances than mine. Personal bankruptcies for the first half of the year rose 37% over 2008, which means that a lot of people are stiffing CapOne and other card companies. And if the company is that worried about my $146 late payment, then it really must be desperate to collect every last penny. Could be that in time, the company will be asking for a bailout, and in a wonderful turnabout we taxpayers will be CapOne's creditors?

If and when that happens, let's go whole hog: Blitz 'em with late fees, over-limit fees, repayment fees, suspensions, and interest-rate hikes. We could make a bundle in this business.