Capital One $425 million settlement payouts delayed after appeal. Here's why

Capital One customers expecting a payout from a recent $425 million class action settlement will have to wait a while longer to get the cash in their bank accounts.

That's because an appeal filed last month on the case has "substantially delayed" the payments, which were scheduled to begin on Tuesday, according to the settlement website.

In April, a federal judge in Virginia approved the settlement, which was initiated the previous January after the Consumer Financial Protection Bureau accused the bank of improperly failing to raise interest rates on its 360 Savings accounts.

In the suit, in which the bank did not admit wrongdoing, Capital One was also accused of deceptive marketing for concealing the existence of its 360 Performance Savings accounts and the higher interest rate of those accounts from 360 Savings account holders, according to the settlement website.

The class eligible for payouts includes all Capital One customers who had a 360 Savings account between Sept. 18, 2019, and June 16, 2025. Customers with the higher-interest Performance Savings account were not eligible for the settlement.

Before the June appeal, the settlement had progressed on a standard schedule. Those impacted were not required to submit claims, and the case passed deadlines in March and April without issue.

But on June 18, after approval by both the judge and a handful of state attorneys general involved in the case, the settlement lawyers received a notice of the appeal that scuttled the timeline.

"The appeal seeks to rescind the settlement and return the matter to litigation," the settlement website reads. "As a result of the appeal, any payments to class members from the settlement fund or in the form of increased interest as provided by the settlement will be substantially delayed (potentially over one year)."

According to court filings, the appeal was brought by a member of the settlement class, who represents herself, arguing that the settlement overstates the amount recovered for those harmed by lost interest. 

In a statement, the lawyers who brought the class action described the settlement agreement as "overwhelmingly favorable" and the appeal as "meritless."

The first $300 million was earmarked for "class cash payments" and other fees and costs, with payout sizes determined by the estimated amount of interest each account holder would have earned if they had received applicable interest rates compared to the 360 Performance Savings accounts.

The remaining $125 million of the settlement was reserved as additional interest payments for customers who continue to hold a 360 Savings account.

Those who have already closed their 360 Savings accounts or converted them to a 360 Performance Savings account were set to receive a "cash payment that is currently estimated to be approximately 15% larger," according to the settlement website.

Customers who keep their 360 Savings accounts open after Oct. 2 will receive "additional interest payments," but will not need to file a claim for them, according to the settlement website.

But the appeal, if it proceeds, could alter the payment structure or other details of the agreement, depending on what a panel of judges on the U.S. Court of Appeals for the Fourth Circuit rules.

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