Some remedial math for Capital One bank

Capital One Bank’s latest ad campaign annoys me and it has nothing to do with Jerry Stiller, who I think is a great comic actor and who I loved in Seinfeld.

Capital One’s latest campaign talks about how great their checking account is because it pays 5 times the national average. Five times the national average. That sounds pretty remarkable if you don’t have the slightest grip on even the most remedial math. Furthermore, it is a classic example of how statistics can be deceiving while the underlying statement remains perfectly true.

I suspect that most checking accounts these days pay no interest. A no interest checking account has an interest rate of 0%. Let’s pretend for a moment, therefore, that the national average for checking accounts is 0%. We learn very early in our schooling (about the time we start learning the multiplication tables, what, second, third grade) that zero times any number is zero. With that in mind, Captial One bank pays 5 x 0% which equals exactly 0% interest. Note that the statement, five times the national average is true because 0 times any number is 0.

Of course, there are some banks who pay interest on checking accounts. My bank is one such bank so I checked to see what the interest rate was. It turns out that it is 0.01% on any part of the balance over $2,000. That means I earn no interest on the first $2,000 in the account. On anything beyond that, I earn one one-hundreth of a percent. Put in a way people can better understand, to earn one dollar in interest for the month, I’d need a balance of  $12,000 in my checking account. For one measly dollar in interest.

Okay, so Capital One pays five times the national average. Since many banks pay no interest and some pay 0.01% interest, the national average will be somewhere between 0 and 0.01%. Let’s split the difference and call the national average 0.005%. That’s one five-thousandth of a percent. I multiply this number by 5 and get 0.025%. Exactly one quarter of a percent interest on my checking account. If  I am very luck, I might earn a dollar or two each month. Of course, there are account fees to consider, which would easily wipe out these earnings, so what’s the point?

Mostly, though, my gripe is with how much of a big deal the ad campaign makes FIVE TIME THE NATIONAL AVERAGE seem. When you are talking about such incredibly low interest rates to begin with, while the underlying statement is true, the campaign itself seems intentionally deceiving.


  1. The Capital One checking rates here in DC are actually decent. Currently they’re 1% APY in the first year, and 0.4% APY after that. The rates aren’t stellar (but rates are kinda low everywhere right now), but certainly better than your calculations suggest.

    1. Joe, I just checked and you are correct. (The numbers I used were from my own bank.) If I am reading their page correctly, to earn the “high yield” interest requires a combined balance of $5,000. Still, my point was more about the deceptive nature of the numbers. Despite being true, “5 times the national average” will still likely amount to only a few dollars a year to someone–and that is if they can manage to avoid any of the other fees the banks charge. I’d point out this fine print that appears on their disclosures page:

      National Average for checking accounts as of 11/7/2011, Informa Research Services, Inc., Calabasas, CA,, based on balance of $1. Although the information has been obtained from various institutions, the accuracy cannot be guaranteed.

      So they are claiming five times the national average and then stage-whispering, “but the accuracy of these numbers can’t be guaranteed.” I don’t know, I just find it amusing.

  2. What’s the difference between Capital One advertising their product in a favorable (yet truthful) way, and you putting a critical (and misleading) title on your blog post?

    1. I hadn’t thought of the title as misleading. Tongue-in-cheek, yes, but not misleading. Maybe it should have read: “Some remedial math for Capital One customers.” I just think the ad is deceiving and when you look at the fine print, even the study on which they base the national average is based on a $1 balance–when they require more than that to open and account and a combined $5,000 to earn interest. I’m not saying that the statement is not mathematically true. That is part of my point. The ad takes advantage of the mathematics of small numbers without ever indicating that these are small numbers that we’re talking about. I’m sure this is a fairly standard practice. Capital One just happened to be the one to permeate my consciousness.


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