Capital One’s $425 Million Depositor Settlement Receives Preliminary Court Approval After Earlier Rejection
A federal judge on Monday granted preliminary approval to Capital One’s revised $425 million class-action settlement with depositors who alleged they were deprived of higher interest rates, reversing an earlier decision that rejected a prior agreement two months ago.
U.S. District Judge David Novak, sitting in Alexandria, Virginia, approved the revised settlement after Capital One agreed to raise interest rates going forward for holders of its 360 Savings accounts. According to attorneys representing the depositors, this change represents an additional benefit valued at approximately $530 million, on top of the original $425 million cash settlement.
The agreement resolves claims that Capital One kept interest rates frozen at 0.3% on so-called high-interest 360 Savings accounts, while simultaneously offering rates exceeding 4% to new customers through similarly branded 360 Performance Savings accounts.
Under the revised terms, Capital One will pay $425 million to depositors holding 360 Savings accounts, after deductions for legal fees and expenses.
In addition, the bank will increase the interest rate on 360 Savings accounts to match the rate offered on 360 Performance Savings accounts and commit to maintaining and servicing both account types for a minimum of two years.
“This is a great result for the class,” said Philip Black, an attorney representing the depositors, in a written statement.
Judge Novak scheduled a hearing for April 20 to consider final approval of the settlement. Capital One did not immediately comment on the ruling.
New York May Drop Separate Lawsuit
In rejecting the earlier version of the settlement, Judge Novak had said that millions of 360 Savings depositors would recover less than 10% of their alleged losses and would remain trapped in low-yield accounts, perpetuating what he described as the same financial harm they had endured for years. Eighteen U.S. states, including New York, had opposed the original agreement.
New York Attorney General Letitia James had also filed a separate lawsuit against Capital One. She has indicated that her office will dismiss the case if the revised settlement receives final court approval and is implemented.
“Capital One customers were relying on their savings accounts to grow, but instead they were misled and cheated by their bank,” James said in a statement. “Today, we are delivering justice for customers across the country.”
The 360 Performance Savings accounts currently offer an interest rate of 3.3%, following recent declines in benchmark short-term interest rates.
Capital One shares fell by as much as 8.2% on Monday after U.S. President Donald Trump called for a one-year cap of 10% on credit card interest rates. Capital One acquired credit card issuer Discover Financial Services in May of last year.
