Capital One recently landed in hot water with the Consumer Financial Protection Bureau (CFPB) for “cheating millions of consumers out of more than $2 billion in interest,” according to the press release. In a nutshell, the suit alleges that Capital One failed to notify its customers that they could earn significantly higher interest rates on their savings accounts by switching to a different product—while simultaneously making claims about having high interest rates.

Interestingly enough, this is something I experienced (or perhaps you could say, fell victim to) firsthand. As a Capital One customer, I kept my emergency fund in one of their savings accounts and only realized—after about six months—that I wasn’t earning the interest I should have been.

While I’ve since rectified the situation, I felt this was something worth sharing with others. Banks operate as businesses, and it’s up to us as consumers to stay informed and proactive when it comes to our finances.

What Happened with Capital One?

According to the CFPB, Capital One promised “high interest” rates on its “360 Savings” account but later froze those rates at 0.30%. Meanwhile, the bank introduced a new virtually identical product, “360 Performance Savings,” which offered interest rates as high as 4.25%. The problem is, they didn’t notify existing 360 Savings customers about this new, nearly identical option with better returns. As a result, customers unknowingly missed out on billions in potential interest earnings.

As consumers, this level of deception is significant. It underscores the troubling fact that a major financial institution can get away with this because clients were relatively inattentive for years on end.

In a recent Bloomberg Opinion piece, author Matt Levine summed it up perfectly, “The basic core of how banking works, is that a lot of people don’t pay attention to the interest rate on their bank accounts, so banks can pay them below-market rates.”

The Importance of Staying Informed

Many people assume banks will act in their best interest. But at the end of the day, banks are businesses.

Unlike a CERTIFIED FINANCIAL PLANNER® who is legally obligated to withhold a fiduciary responsibility to clients, banks prioritize profitability. Often, that means offering the lowest interest rates they can, even when market conditions fluctuate. And, at least in the past, they’ve been able to get away with this relatively unnoticed.

Banks get by on the assumption that the majority of their customers are passive, meaning they rarely check their accounts or question the rates they’re receiving. As a customer, this is important to recognize: the more aware you are of where your money is and what it’s earning, the less likely you are to leave money on the table in the future. Eventually, if enough people recognize the issue, banks (and regulators) may feel the pressure to reassess these standard practices.

4 Ways to Bank Smarter

Keeping your liquid funds in a checking or savings account is still better than storing them under the mattress. Yes, banks are businesses, but they can also help you earn a small amount of interest and protect your funds from threats like theft or home damage.

That being said, there are a few steps you can take to be a more informed and alert customer in the future. These include: 

1. Make sure your accounts are FDIC insured.

Not all financial platforms, companies, and institutions are created equal. The Federal Deposit Insurance Corporation (FDIC) protects your money (up to $250,000 per depositor, per account type) if a bank fails—as long as that bank is FDIC-insured.

By comparison, funds stored in payment apps like Venmo or PayPal are not FDIC-insured, meaning your money could be at greater risk if something happens to those providers.

2. Regularly review and compare your account statements and interest rates.

Get in the habit of checking your statements and interest rates at least once a quarter. If your savings account is offering a rate far below market averages, it may be time to explore alternatives. 

You can find updated national averages on the FDIC’s website. With this as the benchmark, shop around for banks, credit unions, or FDIC-insured financial institutions that closely follow (or even exceed) the national averages. 

3. Ask your bank about better options or new products.

A big lesson learned from this Capital One story? Don’t assume your bank will help you earn more money from them by notifying you of better products. Call or visit your bank to ask if they have higher-yielding savings options. If they don’t, or if the difference is minimal, it may be time to research other institutions.

4. Be prepared to move your money if better opportunities arise.

Some customers feel loyalty toward their banks, but is it worth giving up potential growth to stick with an institution that may not be paying you what you could be earning elsewhere? Consider making the switch if another bank offers a significantly better interest rate and meets your security and convenience needs. Just keep in mind that changing banks can be a hassle, especially if you have automatic payments or direct deposit already established. You’ll want to do your research and choose carefully.

When in Doubt, Ask Your Advisor

While this isn’t meant to instill distrust in the banking industry by any means, it’s rather a quick lesson on the importance of “trust, but verify.” Remember, banks don’t have your best interest at heart; they’re solely focused on their bottom line.

If you’d like to keep up on financial news and other important money matters, I recommend signing up for Bloomberg Opinion’s Money Stuff with Matt Levine newsletter (which is where I originally heard about the lawsuit).

Or, if you’d like to talk through your personal financial situation or ask questions about this story, don’t hesitate to schedule time to talk with our team.

Sources:

1. https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-capital-one-for-cheating-consumers-out-of-more-than-2-billion-in-interest-payments-on-savings-accounts/
2. https://www.bloomberg.com/opinion/articles/2025-01-15/capital-one-high-yield-account-wasn-t?srnd=undefined
3. https://www.fdic.gov/resources/deposit-insurance

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Vancouver, WA works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network. They can be reached by phone at the Corning, NY office at (607) 438-2914, Ithaca, NY office at (607) 463-8400, or Vancouver, WA office at (607) 292-2172 or at the firm’s website at https://lakeroadadvisors.com.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.