Capital One Bank, my business bank since 2004, called me yesterday.
“Great News!” chirped the person who introduced herself as my business account manager, but who I’ve never met, and who has had no previous conversation with me before, ever.
“Ok,” I replied flatly, immediately wary, because banks are not generally in the Great News business, in my experience.
“We’re in the process of switching all of our business customers over to new checking accounts by January 2014, and I thought I’d give you a call to tell you about the two great options you can choose from!”
“You have previously been in the Completely Free Checking account, but we’re transitioning all of our customers away from that account, and you can choose from either a Cash Back Account, or an Interest Checking Account!”
“Ok. Tell me about the Cash Back Account.”
“Assuming you have a balance of at least $2,000, then for every transaction you make per month, whether a deposit or withdrawal or transfer, we’ll credit you with $0.10!”
“I don’t make many transactions per month, but it sounds nice, what’s the catch?”
“We limit the number of transactions in the Cash Bank Account to 100 per month. If you go over that many, we charge $19.95!”
“Ok. What about the other account?”
“With Interest Checking, if you keep an average balance of at least $10,000 we pay you interest, and you have an unlimited number of transactions. If you have less than a $10,000 balance in the account, we charge $19.95!”
“What kind of interest?”
“Right now we pay 0.2%!”
“So which one would you like to choose?”
“Well, let me see if I’ve got my math straight here: With the first type of account you give me ‘cash back’ but that is capped at a total of $10 maximum, but above 100 transactions I’m paying $19.95 per month. So I earn an increasing amount up to $10 the more activity I have, but then suddenly I pay $20 just after I qualify for the $10 ‘Cash Back.’ And then with the second type of account, let’s say I keep my $10,000 balance in your account, you will pay me $20 per month on that size balance, but again you get the right to ding me basically that same $20 anytime I dip below $10,000.”
“That’s right! Which one would you like to choose?”
“Well, really, neither.”
Then, the cross sell
The conversation went on from there, and involved her trying to get me to take out a business credit card with Capital One (I don’t need another business credit card) because that could eliminate my fees if I had at least one transaction per month on the card.
Of course I actually do have a business credit card with Capital One, but with a different business entity, but that doesn’t count, because that would involve logic and human decision-making and taking into account a customer’s actual business relationship, which as I’ve written before has absolutely no place in modern banking.
What’s my problem here?
So why did this phone call remind me of why banks suck?
It’s not precisely the dehumanization, the elimination of judgment, that I complained about before.
And I swear it’s not because they want to change me from completely free to charging fees.
Well, it’s partly that, but in a really specific way.
I don’t mind paying some fees, and I do believe banks should charge for their services, one way or another.
No, what really gives me diaper rash in this situation is Capital One’s introduction of an essentially hidden, complicated, and disingenuous pricing scheme.
“Cash Back Checking?”
It’s called “Cash Back Checking” but your number-of-transactions algorithm means I either get a fraction of $10, or I pay $19.95? And the way you charge me month-to-month could toggle back and forth, just like phone plans with a limited number of minutes that suddenly fall over the cliff and get expensive when I go over the limit?
All that means is that I can’t predict what I’m paying for the service on a monthly basis. Meanwhile Capital One has all the information for determining fees. In case I want to inquire, I’m facing long waits in voicemail and call-center hell.
Also, your “Interest Checking” is a joke as well. $20 on a $10K balance, but with the right to charge $20 when the average balance drops? Obviously consistently larger business balances will go to higher interest-bearing accounts, and much more so, when rates actually rise to something meaningful.
It’s the toggling back and forth between “interest” and “fees,” when the interest is hardly significant in the first place, that shows the point here is not a straightforward fee structure, but rather the smoke-and-mirrors of a bait and switch.
So it’s not really the fees that scratches the rash, it’s the opacity.
Opacity is always a banker’s friend. Opacity is also a reason to end a friendship.
Please also see related post: Why You Hate Your Bank
 Actually I signed up with North Fork Bank, a business-oriented bank built up on Long Island, then making an aggressive push into Manhattan at the time I started my business. Their Free Business Checking was of course why I went with them in 2004. But in an era of constant bank mergers, it makes no sense to expect a bank to maintain the same deal over the years, or to expect any personnel to stay in place. North Fork fatefully bought Alt-A giant Greenpoint Mortgage in 2005 (seemed like a good idea at the time!), then got bought by Capital One in 2006. Capital One announced the elimination of Alt-A lending in August 2007 and took a massive hit on that investment. Ah, shareholder-wealth destruction via bank merger…good times!
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