Should YOU abandon Capital One?

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Following my experience with Capital One shutting down my new Venture card without warning and cashing out my points for only a half cent each, people keep asking if they should use up their Capital One “Miles” and cancel their cards.  Understandably, no one wants to get the same “no points for you!” treatment that I got.

a person diving into the water

In recent years, Capital One’s “Mile” cards (Venture and Spark Miles) have drastically improved for points and miles enthusiasts.  First, they added airline and hotel transfer partners.  Initially, all transfers were at ratios less than 1 to 1 (1,000 to 750 or 1,000 to 500).  Then, recently, they added additional transfer partners and changed some transfer ratios to 1 to 1 (see: Capital One Transfer Partners for an up-to-date list).  And I announced that Capital One “Miles” no longer make me mad (because you now really can earn 2 airline miles per dollar).  We also learned that Capital One cash back can be moved to a “Mile” card and then transferred to airlines and hotels.  This opens earning opportunities well beyond 2x.

While Capital One’s transferable points program has gotten better and better, my shutdown experience has people worried.  I almost always advocate keeping transferrable points as transferrable points until you need them.  That way, you can truly maximize value and avoid most of the pain of mileage program devaluations.  But if there’s a real risk of getting shut down, then keeping your points means risking getting the same abysmal value I got: a half cent per “Mile” (as an aside, I am contesting this situation, but that’s where things stand right now).

Low Risk for Most

I believe that most people have very little risk of getting shut down by Capital One.  If shutdowns like mine were common, I think I would have heard about this from many readers and would have read about it in many blogs.  Neither is the case.

From my limited experience, I do think that some people have significant risk of shutdown:

  1. Previous Capital One Shutdown: If you’ve ever had an account shut down by Capital One in the past, it seems that their systems eventually figure that out and shut down your new account.  This is what seems to have happened to me (my Capital One 360 account was shut down years ago, due to an innocent mistake).  And a couple of readers have reported the same treatment.  Also, Miles Per Day commenter, girlmeetsworld, reported a similar experience in January 2018: “Just had a second shut down from Cap One this week. Prior shut down was just over a year ago. They let you back in, though I didn’t MS on new card, just spent enough to get sign-up bonus.”
  2. Heavy manufactured spending: Manufactured spending (MS) is the process of increasing credit card spend in order to earn rewards while getting most of your money back to pay the credit card bill.  This is often done by buying debit gift cards that can be used to buy money orders or to pay bills.  I haven’t seen many examples of people being shut down by Capital One for this, but Miles Per Day offered up an example here: Reader – Capital One shut down my account for MS.  For more about manufactured spending, see our Manufactured Spending Guide.
  3. Suspicious activity:  I don’t have any real data regarding this, but I’ve previously warned against the following types of activity in order to avoid Chase shutdowns (see: Why Chase shutdowns have increased and how to avoid them):
    • Avoid using your card to purchase convenience checks or to get cash advances.
    • Avoid multiple payments to your credit card within one billing period from different accounts and different sources.
    • Avoid a sudden flurry of large repeated purchases.
  4. Account Inactivity:  Some readers have reported that they hadn’t used their card in a long time and Capital One had then cancelled their card without notice.  This is easy to prevent by making sure you charge something to your credit card at least once every 6 months.

If you don’t fit any of the above risk profiles, then my bet is that you are safe to keep your Capital One “Miles” intact and to use them at your convenience.

Ditching “Miles”

If you decide that keeping your “Miles” around for when they’re needed is too risky, then an alternative is to spend down your “Miles” quickly.  The easiest way to do this is to offset travel purchases for 1 penny per “Mile”.  If you don’t have enough travel spend for this purpose, the next best option is to transfer “Miles” to airline or hotel partners.  If you decide to go this route, here are the best options (in my opinion):

Avianca LifeMiles (transfer 1 to 1)

LifeMiles is Avianca’s loyalty program.  As a Star Alliance airline, LifeMiles miles can be used to book awards on any Star Alliance carrier such as United Airlines, Air Canada, ANA, Lufthansa, Turkish, and many more (as long as partner award space is available).

Pros:

  • LifeMiles doesn’t pass along carrier imposed fuel surcharges on award tickets
  • LifeMiles offers great award pricing on some routes and especially with mixed cabin awards.  See this post for details: Avianca LifeMiles Sweet Spots.
  • Most awards can be booked online.

Cons:

  • LifeMiles charges a small booking fee for partner awards.
  • LifeMiles imposes hefty change and cancellation fees.
  • Anecdotally, LifeMiles support can be difficult to work with, especially over the phone.
  • Miles expire after only 12 months of inactivity, but it is easy to keep miles alive since any new inbound miles will reset the clock including buying miles, transferring in miles, earning miles from their shopping portal, etc.

Cathay Pacific Asia Miles (transfer 1 to 1)

Cathay Pacific is a OneWorld airline and so Asia Miles can be used to book awards on any OneWorld carrier such as American Airlines, Alaska Airlines, British Airways, Japan Airlines, Qantas, Qatar, and more (as long as partner award space is available).

Pros:

Cons:

  • The OneWorld alliance is much smaller than the Star Alliance and so award space may be harder to find.
  • On some routes, British Airways offers the most award space but they pass along ridiculously high surcharges on award tickets.
  • Miles expire after 18 months of inactivity, but it is easy to keep miles alive since any activity should reset the clock (including transfers from Amex, Brex, Citi, Chase, or Capital One).

Wyndham Rewards (transfer 1 to 1)

Wyndham points can be used for Wyndham hotels for either 7.5K, 15K, or 30K points per night.  Even better, you can use 15K points per night per bedroom for Vacasa Vacation Rentals where there are some amazing opportunities to get great value.  You can also convert up to 30K points per year to Caesars Rewards to use points for 1 cent each at Caesars properties.

Pros:

  • Vacasa Vacation Rentals (and some other Wyndham redemptions) can offer incredible value for your points.
  • Capital One is the only major transferable points program that offers transfers to Wyndham.

Cons:

Accor Live Limitless hotel points (transfer 2 to 1)

Accor is a rewards program for a number of hotel brands including Fairmont, Raffles, Sofitel, pullman, swissotel, ibis, and more.  Points are each worth 2 cents Euro towards hotel stays (approximately 2.4 cents USD).  By transferring 2 to 1, this gives you approximately USD 1.2 cents per point value from your Capital One Miles.

Pros:

  • Get better value than 1 cent per “Mile” towards Accor hotel stays.
  • Optionally transfer Accor points to airline partners.  Most offer bad value, but some are 1 to 1: Finnair, Iberia, Qantas, and Virgin Australia.
  • Capital One is the only major transferable points program in the U.S. that offers transfers to Accor.

Cons:

  • Few Accor hotels in the U.S.
  • Points expire 365 days from accrual, but any new points added to your account should extend the expiry.  Unfortunately, for the purpose of this post, the easiest way to add points to your account is by transferring from Capital One.
  • No way to get outsized value for your points except through poor transfer ratios to airline miles.  Even with Accor’s 1 to 1 transfer partners (Finnair, Iberia, Qantas, and Virgin Australia), you would be exchanging Capital One “Miles” 2 to 1 to these airlines (because of the 2 to 1 transfer ratio from Capital One to Accor).

Turkish Airlines Miles & Smiles (transfer 1,000 to 750)

Turkish offers incredibly low award prices for certain Star Alliance awards, but they can be very difficult to work with.  I would recommend this option only for those who have successfully booked awards through Turkish in the past and are confident that they’ll have good uses for Turkish miles going forward.

Pros:

  • Cheap domestic award prices (7.5K one-way economy or 12.5K one-way business class)
  • Turkish considers Hawaii and Alaska to be part of the domestic U.S. and so prices flights to Hawaii on United Airlines for only 7.5K one way!  Since the transfer from Capital One to Turkish is worse than 1 to 1, this means 10K Capital One “Miles” one-way (which is still a steal)
  • Turkish offers many other great award values.  See: Turkish Miles & Smiles Complete Guide.

Cons:

  • Booking Star Alliance flights with Turkish Miles can be a nightmare.  The Miles & Smiles website is awful for booking Star Alliance awards.  If you’re lucky, you’ll find what you need and will be able to book it, but that’s very rare.  Other alternatives include calling and emailing.  See details here: How to book United flights with Turkish Miles & Smiles.
  • Cancelling or changing flights booked with Turkish Miles can be very difficult (but can sometimes be very easy too).
  • Miles expire on December 31st of the 3rd year after they are earned (or transferred in).
  • Capital One doesn’t offer 1 to 1 transfers to Turkish.

Bottom Line

I believe that most readers should be able to continue to use their Capital One cards without fear of shutdown.  If that’s you, then I don’t recommend trying to spend down all of your “Miles”.  Instead, use your “Miles” when the opportunity presents itself to get good value.  For those who read the section titled “low risk for most,” and concluded that they are at risk, I’ve listed my recommendations for best transfer options, roughly from best to worst (to be clear: I didn’t list all options, just the ones that I think are pretty good).  Unfortunately, each option has significant downsides which I’ve also listed above.

If I was in a position to transfer out my points, I’d probably go with Wyndham since I can’t get the same points from Amex, Chase, or Citi and I’m pretty sure that I’ll find good uses for Wyndham points within the next few years.  If I had no idea at all how I’d use the points or when, I’d probably instead go with Avianca LifeMiles as the best program for a wide range of flight awards, especially since their miles are easy to keep alive indefinitely simply by either buying a few points every 12 months or transferring some points in from other transfer partners.

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34 Comments
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Mike O

Add me to the list of Capital One shutdowns. No notice except receiving an email saying I had redeemed my 500k points for $2,500. Called and was told there was “unusual activity” associated with the account and it was closed and points turned to cash. I’ve only had the card for 4 months and only made large business expenses (no MS), but was shut down about 6 years ago.

dizzy

I got shutdown. I sold tradelines for a couple months. I think it was 4 months before the shutdowns, 2 AU’s per month. The annoying thing is that the accounts still aren’t closed- they are “restricted:. Not holding any cash there in my checking anymore, seeing how it plays out (not good, most likely)

Ben

It would be helpful if FM collects shutdown data points from readers to get an idea of how widespread they truly are with each bank and to infer what causes them. Perhaps a checklist of what happened to the account, what happened to the points, and what suspicious things they might have done.

Not trying to turn you into the CFPB, but it could be a valuable resource and probably give you a lot to write about.

Nick Reyes

That’s a nice idea in theory, but it is impossible to know we’re getting the full story from anyone (in some cases, someone might not even realize they had done something that frequently causes a shut down like an anonymous bill payment or paying from several different checking accounts or cycling or whatever it might be). Like Greg says in the post, what made this case unique for us is having complete insight into the situation.

wanderlust

I have had a cap one venture all the way back from when they launched the 75K point offer to open and had the 10X Hotels.com bonus. Its harder and harder to justify it. 2X would be tolerable in several ways but the lopsided rewards are hard to tolerate and the annual fee does not currently pay for itself with benefits. With the current benefits a no fee 2% back card makes more sense in every way but the sign on bonus. Without some change to bonus opportunities or a deal mall so to speak that is kind of like amex offers I see a SavorOne card in my near future before renewal date. That I can atleast park as a second grocery card (I only spend about 2K-3K a year in groceries so dont need some super high cash back, 3% is fine split between two 3% cards and could use for streaming services and just leave the credit line open). Capone does have some savings options through a portal but its not stackable and its not like the frequent 20-30% off for set spend that amex seems to have even on there no fee cards. It should atleast offer the value of a amex blue everyday card (no fee) yet it really does not at present unless they have some real spend promotion like that hotels.com deal was.

Consider:
Venture: $95/year fee, 2 points back that has to be used for travel, a travel portal that who knows how good it is vs anything else. But does offer some transfer opportunity’s.
VS
A Citi double cash, or WF Active Cash, or Fidelity card: $0/year fee, 2% back in universally accepted currency

Without some sort of way to leverage spend more its really only good for select sweet spots and have to claw back the $95 fee each year.

Last edited 3 years ago by wanderlust
george

My experience with CapOne is totally the opposite. I have a couple business Spark cards, 2% cash back. I had a 35k spend limit and was pre-paying and cycling my credit limit about 3 times per month. They actually called me and asked if I would like a higher credit limit. The result was an 88k credit limit. And the csr that called me told me it was ok to prepay my bill.

Dick B

After reading your tale of outrageous treatment, I feel fortunate that all Capital One has done to me is repeatedly decline my credit applications, notwithstanding 800+ credit ratings, 1-2% utilization percentages, and an otherwise impeccable credit history over 40+ years. [Fair disclosure: I was offered an insulting “secured” credit card.]

Jim F.

Glad you resurrected this issue, Greg! I fit none of the categories listed for being at risk of having one’s account closed, yet it happened to me, too. The reason given? Account inactivity. Yes, I had my card (customized with a photo I had taken) in my “sock drawer” for a while and, without warning, I received a form letter informing me that my account had been closed. Since I had once used this card regularly and had had it for a while, I neither intended nor wanted to lose the credit history attached to it. I admitted I had lost track of it but was more than willing to resume putting spend on it to keep it open but the folks at Capitol One were entirely unwilling to budge. Long story short, I have Chase, AmEx, Citi, Barclays and BoA cards in my wallet today — but will never have a Capitol One card again.

Jimbo

There’s a saying we have in the DMV — What’s in your wallet? Not CRAPital One!

Sco

I agree with this post – I don’t think there’s much risk for people who currently have accounts that have been fine.

That said, I just don’t bother applying for CapOne cards because they seem to be so difficult to get approved for. (And they pull from all three bureaus, which isn’t a huge deal but is annoying when you don’t even get approved.) Years ago they denied me for a Venture card when I had an 800+ credit score, a 360 savings account with them, and a Quiksilver card with them that I was putting a (small) monthly recurring charge on every month. Presumably they didn’t like the number of new accounts I’d opened (which wasn’t insane as I was generally trying to stay right around 5/24 at the time).

With the recent changes it is tempting to try again, but I don’t think I will bother until/unless we know more about the reasons they deny people.

Darin

Exact same boat here. Was just denied by Cap One for last year’s 100k Venture bonus with very similar history as yours. I was on the fence on applying again. Read Greg’s post about getting approved after previous denials and Cap One has been sending me emails weekly with the header “Congrats – You’ve Got a 100k Mile Bonus Offer” (no language about being pre-approved, but I never received these solicitations in the past). There are so many 100k+ offers out there now that this one has gotten less attractive as time has gone on given the large spend required. I was still tempted, but Greg’s story and previous experience dealing with Cap One has convinced me it’s still not time to take the plunge with them.

Robert Jones

Capital One is a subprime lender. I would never do business with them.

James

Besides them adding transfer partners, don’t forget that they are having transfer “specials”, too. I believe for the entire month of August there will be a transfer bonus to BA that brings it from 1000:750 up to 1:1. That would be a good time for BA flyers to ditch CapOne miles if they are nervous.
We don’t have a ton of their miles, but we picked up a bunch when they had the 1:10 bonus going with Hotels.com a while back.

Bob

Missing option for transfer of CapOne points is Cathay Pacific’s Asia Miles program. It is a 1:1 transfer, Asia Miles no longer expire (with activity every 18 months, I think), and Asia Miles can be used for awesome international premium seat award flights on Carhay Pacific, as well as on several OneWorld domestic and international partners (eg. Alaska, American, Iberia, Aer Lingus, etc).

Kyle

Past few months my Venture had been sending me offers to transfer balances with a fee but 0 Apr. Didn’t take it as I don’t have balances.

Then just yesterday I get an offer for new purchases starting 8/1-4/2022 at 0 Apr. So will be taking this one for $1500 in theme park ticket purchases.

JL100

is it really 0% or is there a transaction fee?

Kyle

No balance transfer on that 2nd offer so no transaction fee. Good on new purchases

Jags

Less posts on Capital One, more posts on anything else. Capital One is a joke. They make Citi look like a professional, well-managed, high tech bank.

king

Cap one may be bad in bus decisions…but they are surely the high tech compared to others

Robert

Cap One abandoned me a few years ago, I had a savings account with them. Without notice they closed my account and swallowed the measly $20.40 account balance, telling me my state’s unclaimed property division would see it within a month. It never showed up and now they refuse to do anything to find it.

I’ll stay away from them and I’ll tell you to do the same