Based in McLean, Virgina, Capital One is a relatively recent additional to the personal finance industry. In addition to the United States, the company also operates in Canada and the United Kingdom. Capital One employs just over 14,000 employees and earned over $10 billion in revenue in 2005.
The CEO founder of Capital One is Richard Fairbank. Before developing the idea behind Capital One, Fairbank worked for Strategic Planning Associates. In 2004, he was also made a director on Mastercard International's Global Board of Directors.
Company History
After working with Strategic Planning Associates for a number of years, Fairbank developed an idea he referred to as Information Based Strategy. His concept was that the credit card industry would be better served by using technology to gather information that would allow them to customize their products to meet the needs and wants of consumers. To sell his new strategy, Fairbank teamed up with Nigel Morris who also worked for Strategic Planning Associates.
In 1988, they succeeded in getting Signet banks, also located in Virginia, to use their strategy. Although the strategy is not initially successful, Fairbank and Morris developed a low-interest balance transfer card in 1991 which generates positive results.
In 1995, Signet decided to spin-off its credit card devision. The resulting company was named Capital One. Fairbank was named CEO and Morris became company president.
In 1996, Capital One began marketing their platinum Mastercard in Canada and began marketing their credit cards in the United Kingdom soon after.
Since that time, Capital One has grown into one of the largest credit card companies in the United States. Because of its approach to gaining new customers through solicitation, Capital One has also become the United States Post Office's biggest client.
Currently, Capital One has about 50 million customer accounts in the three countries it services. The introduction of new cards, such as the flat-rate credit card introduced in the United Kingdom in 2004, continue to bring new customers to the company.
Acquisitions
While Capital One's primary focus had been on credit cards, the company decided to become a member of the commercial banking industry through the acquisition of Hibernia National Bank. Hibernia started in 1870 and was based in New Orleans, Louisiana. In March 2005, Capital One made public its intention to pay $5.3 billion for Hibernia. A short time before the deal was to be finalized, Hurricane Katrina hit Louisiana and devastated Hibernia's headquarters and a large portion of the area serviced by the bank. Capital One continued the purchase but reduced the price to only $5 billion.
In early 2006, Capital One announced that it will be acquiring North Fork Bank. The bank, which has approximately 350 branches, serves New York City. The arrangement is expected to be finalized by the end of 2006.
Legal Troubles
Capital One's history also includes a number of lawsuits.
In 2004, the Minnesota Attorney General's office filed a lawsuit against Capital One claimed they were using deceptive advertising practices. For example, advertisements use the term “fixed rate” to describe the credit cards even though those rates are increased for late or missed payments. Additionally, a clause in the Capital One contract gives the company to raise interest rates on any card holder for any reason at any time.
Another class action lawsuit claimed that Capital One did not disclose information about finance charges and other rates in relation to their fee-based products, such as “Privacy Guard” and “Accident Protection Plan.”
Financial Education
Capital One developed a number of programs designed to educate consumers about financial decisions. Moneywise University, for example, is a program created in collaboration with VISA to educate college students about personal finances. The program is being offered at a number of schools, including the University of Alabama and Boston University.
Capital One also donated $40,000 to schools in Washington D. C. which participated in their Stash Your Cash program designed for kids between the ages of 11 to 14. The program focuses of teaching money managements skills and the importance of saving.
The Moneywise Consumer Action Partnership and Train the Trainers programs are additional examples. Through the programs associates from over 450 community organizations in 30 states are trained in order to help local individuals learn more about managing their money, dealing with credit, and saving money.
Capital One Company Information - Capital One Credit Card Company - Capital One Credit Company
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