Most of the money will go directly to refund customers who were led to believe the services were free or mandatory or offered more benefits than they did, officials said Wednesday.
The order against Capital One is the first enforcement action by the Consumer Financial Protection Bureau, which was set up a year ago to protect consumers from excessive or hidden fees and other financial threats.
Under its agreement with the CFPB, Capital One will pay about $150 million to 2.5 million customers and an additional $25 million penalty. Capital One will pay a $35 million penalty to the Office of the Comptroller of the Currency, a separate federal agency that oversees its banking operations.
The refunds will go to customers who bought add-on card services between August 2010 and January 2012. They will receive the full amount of fees they paid and any other related costs.
CFPB officials said they observed heavy-handed tactics by Capital One call center workers as they monitored the bank's operations. The CFPB can oversee the biggest banks and certain other companies by stationing employees at their headquarters.
Capital One blamed a third-party vendor and said the vendor had violated its instructions. Capital One apologized to its customers.
CFPB, which was created under the Obama administration's financial overhaul law, is the first federal regulator focused on protecting consumers, rather than on ensuring that banks are stable and profitable.
Its officials referred the issue to the agency's enforcement division.
Capital One settled the matter without admitting or denying the allegations laid out by its regulators.