CFPB Sues Capital One Over Maintaining Two ‘360 High Yield Savings Accounts’ With Differing Rates

I find this lawsuit against Capital One fascinating: (CFPB article link)

CFPB is suing Capital One for cheating consumers out of $2B in savings account interest. See, Capital One froze the interest rate on their ‘360 savings’ account at .30% in 2019 and opened a new version called the ‘360 Performance Savings account’ which continued to increase its rates as interest rates rose.

We’ve seen many banks employ this kind of strategy. Essentially they want to lock in the older customers at the lower rate to pad their profits, and then use the new account product to lure new customers.

In the case of Capital One, the strategy was particularly egregious since they marketed widely their higher-than-average 360 Performance account with a name similar to the old 360 account. This led users of their old version to assume they are earning the higher rate.

In our list of Best High Yield Savings Accounts we try highlighting which banks take the low road and split out accounts to avoid increasing rates for older customers. The better banks steadily increase and decrease interest rates along with market norms.

Those affected by this Capital One scandal are likely people who are busy or older and never stopped to look through their statements and analyze interest rates. It can be, for example, someone who was advised to open the 360 account with the expectation that it would keep up with interest rates and then never followed up to see what rates are being earned.

Beyond the specific lawsuit against Capital One, I find this case intriguing since it can potentially reverberate in the wider banking industry as banks fear the CFPB’s wrath when using these types strategies. Hopefully this will result in banks doing away with the account splitting strategy, and offering all customers consistent interest rates.