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Top Story Why To
Use Debt Consolidation
Capital One Financial keeps the limits low and offers its
most vulnerable borrowers additional cards instead --
helping them dig ever-deeper holes with penalties of
hundreds of dollars a month.
When Brad Kehn received his first credit card
from Capital One Financial in 2004, it took him only
three months to exceed its $300 credit limit and get
socked with a $35 over-limit fee. But what surprised
the Plankinton, S.D., resident more was that Cap One
then offered him another card, even though he was
over the limit -- and then another and another.
By early 2006, he and his wife had six Cap One
Visa cards and MasterCards. They were in over their
heads.
The Kehns were late and over the limit on all six
cards, despite occasionally borrowing from one to
pay the other. Every month they chalked up $70 in
late and over-limit fees on each card, for a total
of $420, in addition to paying high interest rates
as a penalty.
The couple fell further behind as their Cap One
balances soared. Even so, they still received mail
offers for more Cap One cards. "I didn't open them,"
says Kehn, 33, who manages a truck stop and runs a
carpet-cleaning business on the side. "I owe these
people that much damn money and they are willing to
give me another credit card? This is nuts." The
Kehns sought relief at a credit counseling agency
last May.
Credit card experts and counselors who help
overextended debtors contend that Cap One is simply
aiming to maximize fee income from debtors who may
be less sophisticated and who may not have many
options because of their credit history.
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