I was a bill collector for Capital One for one of their 3rd party collection agencies. What Capital One does is they give anybody a credit card with a 200.000 credit limit.
Once you have charged up the 200.00 limit you expect payments of 15.00 a month. If you pay one day late you get hit with a 35.00 late fee, a 35.00 over the limit fee and 15.00 in interest. Plus they bump your interest to the maximum allowable by law. Your new balance then becomes 285.00 with a minimum payment of 85.00. The typical consumer Capital One targets does not have the ability to make that 85.00 minimum payment. If the consumer does nothing the bill will grow to around 1200.00 within 7 months.
This is where the third party agency steps in. We call and demand balance in full. 95% cant pay in full so we offer the "out of court settlement" typicaly around 700 to 850.00 depending how good the collector is. Worst case is the customer cant settle and agrees to payments. We always continue all late, over limit and interest fees. Capital One will not allow us to stop those fees and the consumer pays forever.
The ironice part is Capital One forces all of its agencies to hang banners in the office stating "Capital One - I care - I create value". A good collector brings in 50,000 to 70,000 a month. The agency pays us a bonus of 500 to 1500 based on how we rank with other agencies we are in competition with. The agencies get 25% of everything collected. You are better off borrowing money from Tony Soprano then from Capital One.
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