The nation’s largest banks are taking advantage of customers’ lack of attention when it comes to their savings accounts. The Consumer Financial Protection Bureau (CFPB) recently sued Capital One for creating confusion that led to customers missing out on higher interest rates.
According to the CFPB, Capital One created a new high-yield account called 360 Performance Savings while letting an existing account, 360 Savings, languish at a lower interest rate. The bank advertised the original account as having “one of the nation’s highest savings rates,” but failed to automatically convert customers to the new, higher-paying account.
The CFPB estimates that Capital One avoided paying $2 billion in interest by not making the conversion. The agency claims that the bank misled customers and took an unreasonable advantage of their lack of understanding about the products they were being offered.
However, some argue that banks are simply taking advantage of their customers’ inattentiveness to maximize profits. A study commissioned by Capital One found that many people check their savings accounts less than once a month, and half don’t even know what interest rate they’re earning.
The CFPB alleges that the bank instructed its branch employees not to volunteer information about the new account and didn’t email existing customers until the agency began its investigation. The case is the first of its kind brought by the CFPB in recent years.
The issue raises questions about whether banks are within their rights to profit from customers’ lack of attention. The Dodd-Frank Act establishes that financial service providers can be held liable for taking unreasonable advantage of consumers, but some lawyers argue that this applies only to situations where customers have already been misled or deceived.
The controversy highlights the need for greater transparency and disclosure from banks when it comes to savings accounts. With most big banks offering interest rates as low as 0.01 percent, many customers are missing out on much higher returns by not shopping around. The CFPB’s case may spark a broader conversation about how banks should be regulated to protect consumers’ interests.
Source: https://www.nytimes.com/2025/02/02/upshot/capital-one-savings-interest.html