Capital One's 0 Percent APR Called 'Bait and Switch', Says Ariz. Woman

PHOTO: Capital One logoPaul Taggart/Bloomberg
The logo for Capital One Bank is shown at a branch in the Brooklyn borough of New York, in this Aug. 10, 2011 photo.

Capital One is accused of using a "bait and switch" tactic with a zero percent annual percentage rate offer by luring cardholders to accept the balance transfers then slamming them with interest charges on new purchases from the day they are posted with complicated accounting maneuvers, according to a lawsuit hoping to gain class action status.

The plaintiff which seeks class-action status, Margaret Murr of Surprise, Ariz., says she wrote an Access Check for $4,358.80 in Oct. 2012 based on Capital One's zero percent APR offer for 12 months. The offer stated: "Write a check to yourself - 0% for 12 months" and "We will begin charging 0% interest on these checks and transfers on the transaction date."

The suit alleges that after Murr took Capital One up on the offer, in the following months her payments were first applied partly to the special transfer balance, creating a shortfall in the regular purchase balance, even when Murr paid off the regular purchase amounts in full each month.

"By creating this shortfall, Capital One takes away the interest-free grace period and interest charges created by Access Checks begin accruing the moment a customer makes an ordinary credit card purchase during the Access Check's promotional period," the suit alleges.

So, when Murr made regular purchases during the month, she started racking up interest on those and subsequent purchases at 13.9 percent from the day the transactions posted to the account. Unless a cardholder paid the entire balance of the transfer and the purchases right away, they would lose the no-interest deal. If as little as $1 of the new purchases were not paid, the zero interest deal on the promo balance would disappear, kicking in a double-digit rate, the suit states.

"Nowhere in the 0% APR offer accepted by [Murr] did Capital One state that it would eliminate the grace period associated with [her] account unless she paid the entire purchase balance and special transfer balance immediately and in full," the lawsuit states.

Capital One Bank, a subsidiary of Capital One Financial Corp., headquartered in McLean, Va., is one of the largest issuers of Visa and MasterCard credit cards in the country.

Murr paid the associated 2 percent transaction fee and her balance in full each month, but was subject to "improperly incurred interest charges," late fees, lost the interest-free grace period associated with her Capital One credit card, and "has been the subject of derogatory credit reports and suffered negative credit consequences, and has been harassed by debt collectors," the lawsuit states.

A spokeswoman for Capital One declined to comment to ABC News due to the pending litigation.

"Capital One did not honor the deal we agreed to, and instead it cost me far more than if I simply did business with a different credit card company," Murr told ABC News. "I feel like I was plundered by the barbarians in Capital One's commercials."

She accuses the bank of fraud, breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of the Credit Card Accountability Responsibility and Disclosure Act of 2009. Known as the Credit CARD Act, its aim was "to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan," the law states.

Gerri Detweiler, credit expert with, said the Credit CARD Act, which amended the Truth in Lending Act and went into effect in Feb. 2010, aimed to make things more straightforward for consumers. One of the bank requirements of the CARD Act is to disclose the "conditions under which a finance charge may be imposed, including the time period (if any) within which any credit extended may be repaid without incurring a finance charge."

But Detweiler says, "Credit card interest calculations can get complicated, especially when you have different balances under different interest rates."

"So it's really important for consumers to pay attention to their statements, and when something doesn't look right to speak up," she said. "If you aren't sure whether your interest is being calculated correctly, you may want to reach out to the Consumer Financial Protection Bureau which may be able to help as well."

Tim Blood, Murr's attorney, said, "No company, and certainly not a large financial institution like Capital One, should promise its customers something, but then not follow through on its promise. Worse, here Capital One took far more money from its customers than if they had never done business with them. Through this lawsuit, Mrs. Murr intends to make Capital One stick with the deal it made and, hopefully, deter Capital One from running similar scams in the future."

For consumers, experts say the best way to avoid interest charges on promo offers is to pay the card down completely, take the transfer deal, and make no new charges on the card until it's paid off. It's a lesson that Murr learned the hard way.