This is one to be filed under “Cautionary Tale”.

Here’s a young couple looking to take a nice trip abroad for the new year and they are doing their best to think wisely with regards to finances, specifically avoiding the currency conversion charges that some cards will hit you with when making purchases overseas. They settle on a Capital One card that doesn’t charge the fee but upon signing up they are only given a $1k credit limit which is too low for their comfort. “No worries!”, offers the representative, “Just send us a check for $6k and you’ll have a $7k limit!” After signing up they gave some more thought to the proposition and with their vacation looming near confirm again with Capital One that the extra $6k will be available on their account and are assured repeatedly that everything will be fine.

Great!

On December 30, we were eating dinner in Costa Rica. I tried to pay with my card. It was declined. I went next door to buy $2 worth of postcards (yes, with a credit card; desperate times, desperate measures). Again, rejected.

Um. That must have been some dinner…or maybe not.

…a $6000 deposit on a zero balance was a huge red flag, and there would be a mandatory hold on my account. I started to explain everything, but he cut me off: “You have to understand, there are rules. I know you wish you could make the rules, but these are Capital One’s rules.”

Ah, the old “your money is my money” rule.

So what is Capital One’s responsibility here? They have it documented on several occasions that their representatives assured him that overpaying his account would boost his credit limit. Ideally, they should pull the hold from his account or reverse the $6k deposit he made before leaving thus freeing up funds in his checking account.

What is the the consumer’s responsibility here? Well, the old adage “don’t put all your eggs in one basket” comes to mind. Honestly, they should have spread the trip over a couple of credit cards and some travelers checks and if they really wanted a zero fee card with a $7k limit shopping for one a couple of weeks before the trip really isn’t the best time to do it. Just like investments time and diversification are your friends and always keep an eye on your wallet when dealing with a credit card company.

via The Consumerist

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