Capital One Leads the Consumer Credit Charge

By Terence O’Hara, Washington Post

Richard D. Fairbank may be the person most responsible for the boom in consumer debt.

Teaser rates. Balance-transfer offers. Blizzards of direct-mail pitches. Credit terms tailored toward almost anyone, regardless of financial status. All those ideas, common now not only in the credit card business, but also in home mortgages and other forms of consumer lending, were first put to use at the company Fairbank co-founded, McLean, VA-based Capital One Financial Corp.

Since it was spun out of a mid-size Virginia bank in 1995, Capital One has become the nation’s second-largest independent credit card company, and the fifth-largest overall. Capital One’s democratization of lending — the idea that almost anyone can get an unsecured loan on some terms — made it a prime mover in the rise of American consumer credit in the 1990s.

Credit card and auto-loan debt in the United States totals more than $2 trillion, a 24 percent increase in five years that has worried consumer advocates but bolstered the profits of companies like Capital One.

It earned more than $1.5 billion last year, and more than $1 billion so far this year. And it has become a household name with the help of frequent television commercials featuring comedian David Spade and a horde of barbarians lampooning its competitors.

But Fairbank is only getting started. Driven in part by the tapped-out credit card market and tightening profit margins in that business, Capital One is on an ambitious and risky campaign to become a diversified, national financial services company.

For this complete story, please visit What’s in Capital One’s Wallet?