Apparently, a low fixed APR for life isn’t entirely as low, fixed or long lasting as the description may lead one to believe. Recently, Chase has been adding $10 monthly service charges to credit card accounts with low interest rates and large balances that are more than two years old.
This new fee, which is added to the higher, variable APR, is only the beginning. More strikingly, Chase has raised the monthly minimum payment on many cardholders with low rates from 2% to 5%. This move, much more so than the $10 fees, can mean the difference between keeping current with monthly payments and falling behind. In fact, it is downright cruel to many creditworthy people struggling to get out of debt the honest way.
Just how dramatic this increase in monthly payments is best exemplified by a person with a $10,000 balance. At 2%, the monthly payment on the card is a reasonable $200. However, when that payment is bumbed to 5%, the payment balloons to $500 a month. For many, that $300 monthly increase could be the difference between getting by and giving up.
In the short run, Chase risks pushing honest, hardworking Americans who would never consider defaulting on their payments into a corner. In the long run, Chase risks chasing away credit worthy customers and damaging their brand. Who would want a Chase credit card if they were aware that Chase clearly reserves the right to push customers to the brink?
In an article from smartmoney.com used a source for this article, http://www.smartmoney.com/Spending/Deals/Card-Issuers-What-Will-It-Take-to-Make-You-Go-Away/?afl=yahoo, one consumer hit by the Chase rate increase had a credit score of 800 and was only using 30% of his available credit. He had signed up for a 3.99% fixed APR for life, looking to take advantage of a competitive rate and his account was not in arrears. Nevertheless, Chase more than doubled this person’s repayment rate. Perhaps their “models” showed that the customer could afford to repay them. However, “models” are the reason we’re stuck in this credit mess.
In a footnote to the SmartMoney article, a Chase spokesman asserts that the changes affect fewer the 0.5% of its customers. While that may be a small percentage, a large bank with Chase that has millions of customers could essentially be pulling this devious trick on tens of thousands of consumers. Sure, it may only be 0.5%. But the people affected aren’t percentages. They are people trying to get through the toughest economic landscape of their lifetimes. And instead of sending out a life raft, Chase seems to be pushing them underwater.
Note: We’ve recieved tons of mail and posts from visitors who have had similar experiences with Chase and other companies. We thank those who’ve shared with us and invite anyone who has had a bad credit card experience to post (or VENT) your anger and frustration here. The more information available to consumers, the more we can help each other through this turmoil.
February 27th, 2009 at 3:47 pm
Thanks for this refreshingly informed post re: this extortion scam Chase is trying to pull. So far, NINE class-action suits have been filed against them. A number of folks (including myself) are contributing info re: this problem at ChangeInTerms.com (a site started by Dr. Robert Lahm Jr.). Worth checking out.
February 27th, 2009 at 10:29 pm
Chase has perpetrated one of the most despicable acts in the history of credit cards. Imagine that, a company that has previously testified before Congress about playing fair and providing “opt outs” (none exists in this instance) pretending as though this outrageous demonstration of total disrespect (to good-paying account holders who have done nothing wrong) was somehow alright, because it was only perpetrated upon some percentage of all account holders.
Based on 156 million cards issued, the number is not tens of thousands, rather, its hundreds of thousands. Furthermore, if its a small business or family that has been hit, the ripple effect may impact millions of people.
That so-called fee is in fact, “a finance charge,” as per the actual change in terms notice, despite Chase’s constant media spin trying to call it a fee or a service charge — this is certainly a case that could be a poster child for “deceptive marketing strategies.” That’s the reason for the 10 class action lawsuits to date — yes the number is growing. Bait and switch, fraud, violation of TILA (Truth in Lending Act) provisions, all are among the allegations that I think a “jury trial demanded” venue would absolutely prove beyond a reasonable doubt.
Since I am an academic, you may enjoy knowing that this will be another kind of case beyond any court proceeding when I am done, as in “textbook case study” on what happens when a company is too bold in its willingness to abuse consumers. Future generations in college classes across the nation, will learn what not to do, from this.
February 28th, 2009 at 3:26 pm
Thanks for your update Dr. Lahm. Please keep us posted on any developments, especially any remedies for those affected by these practices.
March 3rd, 2009 at 12:49 pm
My complaint is that my husband and I have worked our whole lives to build our credit, I always thought we had good credit. Recently almost all of our credit cards have reduced our available credit down to what we owe, raised the interest rates, require bigger payments. We are not late or over the limit on any of our cards, yet they feel it necessary to ruin our credit. One card we had available credit of 20,000.00 and owed 5,000.00, they reduced our availabilty to 5,200.00. Why do they want to ruin a good customer, I have had my credit cards for over 10 years. Now that they have done this I don’t want to pay them a dime. What difference does it make to me now, my credit is already ruined. Thanks for letting me vent.
March 3rd, 2009 at 4:59 pm
Bonnie,
It never fails to make me angry every time I hear something like this (and I’ve been hearing a lot about this lately). I know this probably won’t help, but there is a silver lining here: they didn’t double your interest rate. That has been happening to a lot of people.
The cutting of credit limits by the banks is really a nasty thing to do, as it can have a huge impact on credit scores. This, of course, works out well for the banks, because they can charge you more to borrow when you purchase a car or home.
I tend to say this alot, but the best way to get back at them is to do a 0% balance transfer. This will save you on money this year and keep your interest payments from going into the bad bank’s pockets. However, these credit limit reductions are making it hard for people to get approved for new credit cards. Its enough to make your head spin.
Thanks for sharing and warm regards.
April 8th, 2009 at 6:35 pm
I have excellent credit, over 800. I have held a Capital One card for over 10 years, but did not use it due to its high interest rate. I kept it because I didn’t want to ruin my credit by closing out my longest held credit card. That company was bought out by Chase, and they closed that account due to inactivity. Bank of America just informed me that my 9.99% credit card rate has gone up to 15.24% variable. I pay the balance off on this card every 3 or 4 months. My one other card is another Chase card. I’m afraid of what they’re going to do with that one soon. I’ve kept relatively low credit card balances, and this is the “reward” I get for being a responsible consumer. I’ve considered applying for another credit card, but am not sure what the last credit card cancellation and raising of interest rate have done to my credit.
The credit card companies are able to raise rates and lower credit lines on a whim, and we just have to sit and take it. I hope congress will do something soon. This is ridiculous. The days of loan sharking are alive and well!
Thanks for letting me get this off my chest.
April 21st, 2009 at 4:20 pm
I just recieved notive from Chase Credit that they are adjusting everyones (Business and Consumers)interest rate by 2% regardless of credit history or balance. I love the idea that they can give out worhtless loans to folks who could not afford it and then expect the customers who stayed faithful to bail them out. Chase is worthless in my humble opinion now. I am pulling out from Chase tomorrow as I am not paying their way out of the mess they created because of greed.
April 21st, 2009 at 5:56 pm
This is the first I have heard of this. If true, and I don’t doubt you, it is absolutely absurd. It seems that responsible people will continue to foot the bill for deadbeats. Of course, the move is completely legal and seems to be timed ahead of the White House meeting with credit card executives. I imagine credit card issuers are worried they will be forced to hold interest rates on deadbeats artificially low, so they’re taking a proactive move and punishing everyone. I think this is called socialism. Perhaps your card is issued by the Norwegian branch of Chase credit card services.
April 23rd, 2009 at 7:43 pm
Hi-
I am not an AARP, but I have a Chase M/C, over five years now and have never had a late payment, over limit, etc. Always ran a low to average balance. Received a notice today which a lot of people are apparently geeting: same lingo as others– ” ….in response to market conditions and to maintain profitability on your account.”
PROFITABILITY! Not enough TARP money I guess. My rate was 10.99 five years ago and has steadily INCREASED to 17.2% even with a perfect history. Now they are going to prime + 17.99, to “maintain their profitability .”
Funny, Wachovia let FIA Card services take over their clients. My $20,000 limit slashed to $9,100 on that one. Never late, fiver year client. My other Wach has stayed at 10.9 for now. Not holding my breath there.
OK, heres my suggestion: pay off the Chase card to zero, spend $100/month then pay it off monthly. Just to keep your long credit lines showing for now. And go for another bank !! This is what I am doing, then I am CANCELLING the Chase card of course.
BTW: The notice also says they can cancel the card for any reason, INCLUDING lack of use by me (the member). Burn in h***, Chase! We love ya!
April 24th, 2009 at 8:17 am
Profitability seems to be the reason for some Chase interest rate increases, as a visitor emailed me a notice he recieved that said the same. Right now, it seems like the customers getting hit with rate increases are those with good credit and long hisotries. In the banks eyes, the figure people like you will actually repay them. If they raise rates on people with bad credit and tons of debt, they figure those people just won’s pay. Consequently, they target the honest, hardworking people who deserve rate decreases in this economy.
May 18th, 2009 at 4:15 pm
I want to scream! I have 4 Chase credit card accounts and just recently opened a checking account with them. I have a very good payment history with Chase and have been with the company for maybe maybe 6 years. Last week I discovered that somehow I had overlooked scheduling my online payment. They changed my purchase APR from 11.24% to 29.99%, more then doubling it. I called customer care and he said to make the payment then call back in a couple of days and ask them to convert my rate back. I figured it would be no big deal as it was an honest mistake and I have always paid well. To my utter frustration, they were pretty abrupt about not changing my rate. No working with me whatsoever, just a big fat NO. I am currently carrying a $19,000 balance on that card which isn’t even my charges and no I’m getting screwed royally on the finance charges. Thanks for listening. I’m happy to submit my story to any group that is interested!
May 18th, 2009 at 6:29 pm
Teresa,
I am so sorry to hear this. Credit card companies are using any legal method they can to charge higher interest rates. It seems like they truly want consumers to miss a payment so they can raise interest rates.
Again, I am really sorry to hear about your situation and I wish I knew some trick that would work. Basically, though, I would try to contact them again about your situation. Perhaps they will give you a lower rate if you agree to close the account or make a substantial payment. By all means, though, I would call them over and over again to see if there’s anyway you can get your rate reduced.
You have a really large balance and if you can’t pay it off, you’re looking at close to $6,000 a year in interest. If you have a good credit score, you may be able to transfer some of your balance to a low or 0% rate. However, it may be hard to get a $20,000 credit limit from another company in this environment. If that is the case, you may want to consider looking for a credit counselor at http://www.nfcc.org. This website can help you find a legitimate non-profit company that can assist you if your credit card company is unwilling to work with you.
June 26th, 2009 at 6:26 pm
Well, I just found out I am one of those .05%. And when I called to see if there was anything they could do I was told absolutely nothing. NEVER late, excellent credit, always pay more than my min and my monthly pymts are going from $250 to $500 a month, jeapordizing the extra money I did have each month I was going to have to put toward my mortgage when I have to remortgage before my arm is up. They gave me a number for free credit consumer advise, maybe I could get a personal loan to pay it off (FYI my interest rate was an offer 4%) so I pay a higher interest rate in order to keep my monthly min down! I called and the girl that answered announces they are affilated with Chase…ok is there something here that is not legal? We give you an offer for life, then tell you your min goes from 2 to 5%, making it impossible for you to pay. Then give you a number for a group that works for us to give you a higher rate loan to pay us off…is there anything we can do about this?? SO I did apply to another credit card company with a 0% interest on new purchases for 6 months and bal transfers for 9mo. I got accepted now I just have to see if they will transfer my entire bal.
June 26th, 2009 at 6:33 pm
FYI I did cancel my Chase account and even though I did this and this supposedly means I am not accepting the change of terms, they told me I had no choice I still have to pay the 5%.
June 27th, 2009 at 12:40 pm
Terry,
Its amazing how inflexible Chase seems to be about this increase. Many people have written saying their payments have escalated into the thousands. At a time when banks can borrow from the Fed for 1/4% interest and sell CD’s with 2% interest, you’d think they’d give their customers a little leeway. Unfortunately, many people are going to be forced to default on their accounts as getting a new card with a low rate balance transfer and a decent credit limit is growing more difficult by the day. Hopefully, you’ll be able to transfer the balance away and wash your hands of this company.
June 28th, 2009 at 8:18 am
I have two credit card accounts with Chase with low promotional balances, so I had opened these accounts to transfer over higher rate balances on my other two cards. I received a notice that they were raising my min payment from 2 to 5% on one account and not the other. Then I called back about another question and they told me that they were raising it on both accounts. I asked to speak to a supervisor who said that they were only raising it on one account. Every time I call, I obtain a different answer. Try it-call every 10 minutes so you get a different person, and you’ll get a different answer. Then one person had me enroll in their payment protection plan because he described it to me incorrectly. I found out the information was incorrect when I called back. So don’t let them rope you into that plan!!! The supervisor I spoke to today was very annoyed that I even called to double check that they were only raising the minimum payment on the one account and not both and kept sighing on the phone very audibly. I had her on speaker phone so my husband could hear her. He was appalled by the lack of customer service and the knowledge that they have about your accounts. They did raise the interest rate for purchases on both accounts and I have never been late on a payment, I pay almost double the minimum payment to begin with,and have been a customer of theirs for a while now. I will definitely never use these accounts again once they are paid off because I think
Chase is being unfair to their customers. Either way you look at it, it reflects negatively on your credit score – whether you leave the account open and don’t use it or close it. Chase also bought out my mortgage company. Great – wonder what if anything they can do to mess with my mortgage payment????
June 28th, 2009 at 11:35 am
Terry,
I am one of the Chase CC customer that is affected by their 5% minimum payment increase. I have been with them for more than 5 years, have not made any single late payment. Their practice is outrageous! It is useless to contact them. I have called and asked nicely of other alternatives, and was told nothing can be done, except I have 30 days to look for other institution to transfer my account. Two years ago Chase called me offer me this fix rate 5.99% option to combine my bill to one place, I carry pretty large balance, my current payment is $350. I am not sure which institution I can transfer this balance.
How is that the Federal allow this kind of practice?
How many more people will be pushed to default their credit, foreclose their houses, or file bankruptcy? I am afraid if this practice continue to other companies as well, we will never be get out of recession. Chase needs to be barred from getting any Federal incentives or help. It should be punished as they are trying to plum our economy further.
June 28th, 2009 at 12:09 pm
Chris,
Its really unbelievable and you make a very good point – if banks continue to extort money from customers, we’ll never get out of this recession. It would be one thing if other banks were still in the business of low rate and long term fixed rate balance transfers. But now, it seems as if they want customers to default so they can jack up the interest rates. Its really a shame.
June 29th, 2009 at 12:29 pm
I have 2 accounts with Chase , one the minimum payment was raised from 2% to 5%. I called & they said they would try to approve me for a 2% fixed rate with a fixed payment for 5 years to pay off the one card that I now have a fixed rate of 4.09% on. They said there is no negative credit reporting, they will just have to close my account. What’s in it for them?
June 29th, 2009 at 1:07 pm
That’s a good question. If you are able to get this deal, please share how and what the new terms are.
July 4th, 2009 at 12:31 pm
I also received the notice from Chase that my minimum payment was being raised to 5%. I was offered a 4.99% rate for the life of the balance transfer and at the time I got the offer I transferred every account I had plus a car loan that was at 9.5% – so my balance is large. My minimum payment is going from $500 to $1250. I called and told them there was no way I could make that payment. They transferred me to a hardship department or something like that. I was on hold for 45 minutes waiting to talk to someone. They asked a bunch of questions about my income, other loans, etc. and then came back and said they would close my account and transfer my balance to a 60 month fixed payment loan at 6% interest. The payment will be just under $500 so I will at least be able to make it. They said it would show the account was closed at the customer’s request. I have yet to get any paperwork from them so I am holding my breath that the deal is real. I’m sure this will hurt my credit score but I have no other choice. I’ve been a nervous wreck sinse this all started. Has anyone else had a similar experience?
July 6th, 2009 at 10:12 am
[...] Susanne: I also received the notice from Chase that my minimum payment was being raised to 5%. I was offered a 4.99% rate for the life of the balance transfer and at the time I got the offer I transferred every account… [...]
July 6th, 2009 at 6:13 pm
Susanne, Just got off the phone with Chase and had a similar experience and the same deal. I owe 11,500 and have paid on time except was 1 day and 4 days late in March and April respectively and I received a “Skip a payment” for May and I sent in $200.00 anyways so as not to fall behind. They thank me by raising my rate to 27.24%. I also talked to their “Hardship Dept.” and they also put me on the “Balance Liquidation Plan” 6% for 5 years. “Voluntary” closing the account at my request and they claim no impact on my credit score. I am fine with this. They don’t want to lend anymore and I don’t want to borrow anymore. All I really wanted was my old interest rate back and the opportunity to pay it down. They did me a solid!
July 6th, 2009 at 10:13 pm
Chase just raised my credit card rate by 4%. I almost always pay them more than the minimum payment. Last month (June 09) they sent me a bill with a zero minimum payment. I payed them less because they asked for no minimum payment and I just bought a house and was moving. ZAPP!!! They increased the rate on my card 4%. I am not sure if this was why but what low down dirty scoundrels. I am done with these rip off artists. I just paid off the balance to stop this nonsense immediately. Chase just lost me as a credit worthy customer. TOO BAD. Hope they all rott in hell.
July 12th, 2009 at 5:11 pm
Just have to chime in. I, too, am in that 0.5% or whatever it is – stellar credit, never a late payment, etc. The kind of customer that is too good and too smart, apparently. (or at least THOUGHT we were smart!) I did my last low interest for the ‘life of the balance’ transfer with Chase a year ago. At that time, I asked about the rates and terms, SPECIFICALLY if my monthly payment would stay at 2% of the balance. I was promised 4.99% and 2% monthly payments ‘For the Life of the Balance.’ I still have the notes! None of that matters though. They need their money back, apparently. I’ve filed complaints everywhere I could think of, OCC, FTC, BBB, Consumer Affairs, my Senator, my Representative and my state’s Attorney General. I’ve also talked to my own attorney. I’ve also begun making arrangements to pay the whole balance off. Unlike others, I do not plan on closing the account. Rather, if they choose not to honor their agreement with me, I will go from a profitable customer to an unprofitable customer. I will pay the balance off and then purchase a pack of gum once a month from now on. They will actually lose money on my account. I suppose at some point they will catch on and close my account. Oh well, it will be a moral victory at least.
July 15th, 2009 at 5:58 pm
They just raised my rate 5% from 7.24% to 12.24%. I have never been late with a payment. My credit rating is very good. When I called them and asked them why they were raising my interest rate, they told me that all other cards are doing that also. I know that is not true as I have other cards at 6% that are not raising rates. I just opted out of the interest rate increase and will pay them off at 7.24%. I am not, however, being quiet about this. I was under the impression that our new socialist government was reining in credit card companies and their crooked practices. It seems that they have just made it worst and are allowing them more freedom to rip off their customers!
July 16th, 2009 at 12:10 pm
I am also one of the 0.5% that had my minimum payment raised from 2% to 5%. However, I haven’t heard anyone tell about their blackmailing techniques. I have 2
Chase cards. One had a fixed 3.99 promo and the other a 5.99 promo for the life of the loans. In addition I have balances at 27.24% on both cards. They said that if I agreed to raise the promo rates to 7.99 they would let the minimum remain at 2%. I had no choice but to agree since I couldn’t afford the payments at a minimum of 5%. I call this extortion. Anyone else experience this arm breaking?
August 19th, 2009 at 5:41 pm
Which did you take 0% for 6 months or 3.99 4.99 5.99 for life of the loan?
I have read everyones posting on this matter, The goverment told chase to increase rates on fixed APR? Thats not what supervisor said to me. I accepted 3.99 4.99 and 5.99 % on balance tranfers for the life of the loan. With a processing fee for the transaction too. When I called about payment going from 2% to 5% I was told the bank is not making money on the low promotional APR 3.99 4.99 5.99 with statements, reporting to credit bureaus, postage the bank is losing money with those pomotional balances this coming from a supervisor. Never missing a payment or being late, sending over min amount due. I was advise I could have 2% back if I agree to let them drop all promotional rates and take 7.99% till August of 2011 and will be almost double that interest rate after that I bet . Which one did you agree on when you did your tranfers
A typical offer presented the customer with two options:
The customer could accept a 0% fixed rate for a specified period of time, such as one year. After that time, the Annual Percentage Rate (APR) on the loan would increase. Or,
The customer could accept a loan with a higher APR, such as 3.99%, that is a “fixed APR until the balance is paid in full.”
Where did it say they can increase the Apr on a fixed APR until the balance is paid in full ???
I did have to accept the 7.99 % but I also joined class action against them. I’m fighting back.I agree with Dr Lahm, Bait and switch, fraud, violation of TILA (Truth in Lending Act) provisions.
August 26th, 2009 at 9:32 pm
I have a fixed interest rate of 4.99% for the life of a loan thru Chase. My last payment was $106.00 & it just increased to $208.00. It’s rediculous! I have 2 loans thru Chase & I can’t even imagine what the other one is going to jump too. They’re going to push me into either a debit consolodation or bankruptcy. I can’t afford any more than what I’ve been paying them. I have good credit but that won’t be for very long. I’m very disgusted!
August 27th, 2009 at 10:08 am
This monthly payment raising is very shameful. They truly are pushing people to the end. Many visitors have reported success by using the hardship department. In many cases, they were able to get lower interest rates and lower payments. You may want to call and try to contact them.
August 28th, 2009 at 1:18 pm
same happened to me-220 payment to a 477 payment which I can’t afford. I’ve always paid my fees on time and have great credit. The receptionist said “The good thing is is it will be paid off quicker”. I will transfer to another bank and close all accounts. Chase is a RIP OFF!!
August 31st, 2009 at 9:42 am
Tim, if you can’t get approved for a balance transfer credit card – you can compare offers in the main section of our website, there’s some good information on blog from customers who worked out solutions with Chase. The key is to be persistent and always deal with supervisors based in the U.S. Overseas reps at a lot of these companies can do nothing and are often dishonest – many Smart Balance Transfer visitors have reported problems with them.
September 7th, 2009 at 11:43 am
Bonnie McCormack, Have you had any problems with the conversion to 7.99 percent? Just wondered how it reflected on your statement and if they indeed lowered your payment back to 2 percent? Also, did they give you a time limit for that — such as August 2011?
September 16th, 2009 at 4:58 pm
I’m also affected with the 5%increase in payment I went from 200.00 to $465.00. There has to be help somewhere!
September 22nd, 2009 at 10:27 am
I never received a notice of any kind, I was fixed in at 3.99% for life. My minimum payment was $324 and I always paid between $430 and $450. My payment jumped from $324 to $734. I called and asked why the payment had jumped up and they said notices had been mailed out that the minimum interest was being raised to 5% and that I had to have received a notice and probably just threw it away. I didn’t appreciate being told I throw my mail away and that despite being a customer with them for over ten years, never having a late payment and always paying more, there was nothing they could do other than advise me to pay the new minimum payment and try to pay more to keep up my good credit with them. I asked to speak to a supervisor and asked if there was anything they could do, as I have been an excellent customer of theirs and have excellent credit. She said yes, I could pay my account in full and either close it and the other with a zero balance or just not use them. It just warms my heart to know that after all my years with them, etc – that this is how they reward their customers and tells me exactly what Chase thinks of its customers – not very much.Thank you for letting me vent.
September 22nd, 2009 at 12:51 pm
I hope you at least were able to stop doing business with them. And feel free to vent. That’s what we’re here for.
October 30th, 2009 at 10:46 am
I’ve had 7.99 for 10 years with Chase. Always paid in full, on time. Used it exclusively for travel. Chase were raising the APR to 14.24%. I gave them one option: 7.99APR fixed, no fees (continue the terms of the contract). They refused and presented no counteroffer. I told them their failure to make prudent business decisions in the derivatives market isn’t my problem, and I don’t *really* need their services. I paid off the balance. I cancelled. You should do the same – show them just how badly you don’t need them.