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Capital One Venture Card's Biggest Enemy: Itself


Both poor customer service and confusing rewards redemption signal potential long-term problems for one of the best rewards credit cards out there.

It used to be the case that to get 2% cash back on all purchases you had to either open a Charles Schwab or Fidelity credit card. With the Schwab card no longer available and the Fidelity card requiring an investment account, the Venture Rewards Credit Card from Capital One (COF) has filled the void. Serving basically as a 2% cash back credit card when miles are redeemed for any travel-related purchases, the Venture Card has quickly become one of the most popular spending vehicles among people with excellent credit-a boon for Capital One considering this is the customer segment most prized by issuers. Having distinguished itself within the rewards credit card marketplace, the only thing that could hurt the Venture Card's reputation is Capital One itself.

For all of Capital One's no-hassle talk, redemption for miles earned with the Venture Card can sure be a pain. Unbeknownst to many customers, rewards miles cannot be used to partially offset the cost of a plane ticket or hotel booking. If one does not have enough miles to cover the full cost, no miles can be used.

To complicate matters, there are some caveats to this policy. For example, if you book multiple plane tickets during a single transaction, Capital One will allow you to break up the cost of that transaction and use rewards miles to pay for as many single tickets as your miles allow. But the same cannot be said for hotel reservations. Even if multiple nights or multiple rooms at a certain hotel are booked together, miles can only be used to cover the cost of the entire transaction.

Confusing, huh? Heather Stockburger, a longtime Venture Card user, thinks so.

"There's no reason for Capital One to get in the way of a great rewards program," she said. "Redemption should be simple. You should be able to redeem miles for their agreed-upon worth anytime with no restrictions or hoops to jump through. Unfortunately, this isn't the case. And, as if this wasn't bad enough, the company's customer service reps might try to steer you toward accepting a statement credit that cuts the value of your points in half."

According to Stockburger, upon calling to redeem miles for an airline ticket, the customer service rep had trouble locating the purchase in question on her bill and offered a generic statement credit instead. While this might not seem like a big deal, miles redeemed for specific travel-related purchases are worth double those exchanged for general statement credits. Had she accepted the customer service representative's offer, she would have therefore cost herself around $300 and would have effectively defeated the purpose of using the Venture Card in the first place.

Both poor customer service and confusing rewards redemption signal potential long-term problems for one of the best rewards credit cards. Sure, the current policies keep customers from redeeming miles as often as possible and save the company money as a result, but they also increase costs because of longer customer service calls and lower customer satisfaction. Capital One's policies therefore represent a financial wash, at best. In order to prevent the Venture Card from losing social cache, Capital One must make an effort to correct its flaws. If it doesn't, the company risks losing its acclaimed position in the rewards market to issuers nipping at its heels. Just last week, American Express (AXP)-best known for its customer service-launched its revamped Blue Cash Credit Card, offering higher rewards than any other credit card on certain spending categories, such as supermarkets, department stores and gas stations.

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