Yesterday, Chase released a new version of the Freedom credit card, the Chase Freedom® Visa – $50 Bonus Cash Back Offer. While this offer may seem less generous, it is in fact the opposite. This new Chase Freedom card lets you earn $50 cash back after your first purchase and, more importantly, offers a 0% APR on balance transfers for 12 months and a 0% APR on purchases for 6 months.

Consumers who don’t carry credit card balances and thus don’t need a 0% APR on balance transfers can clearly benefit more from the $100 cash back bonus offer. However, consumers who carry balances and could benefit from a 0% APR for a year are much better off with the new deal.  While the balance transfer offer carries a 5% balance transfer fee, the $50 cash back bonus offsets this fee on the first $1000 transferred, essentially providing a no fee balance transfer.

Like Chase, Discover is also running a special cash back bonus promotion with the  Discover® More® Card – $75 Cashback Bonus®. However, this offer is similar to the $100 cash back offer from Chase in that it requires customers to spend $500 during the first three months of card membership. However, the $75 cash back bonus does offset the balance transfer fee on a $1500 transfer.

To get the most value out of these offers, it is important to consider how you will use your card. A person who carries $1000 of credit card debt at a 15% interest rate can likely save around $100 in interest with a 0% APR for a year, plus get an extra $50 cash back with the Chase Freedom® Visa – $50 Bonus Cash Back Offer, bringing total savings to about $150.  However, if you don’t need to transfer a balance, the best Chase credit card deal is likely the one that offers $100 cash back. 

For more information on current Chase credit card offers and details on cash back promotions, please visit the main section of Smart Balance Transfers where you can compare credit cards and apply online for approval.

*Important Note: Credit card offers change frequently. All information is accurate as of the date of publication, but may change at any time. Please see the terms and conditions of any credit card application refernced for complete details. All information is presented “as is” and “without warranty.”

According to these posters, people who have been hit with payment increases should request to speak with the aptly titled HARDSHIP DEPARTMENT.  Both posters wrote that they were able to negotiate a lower monthly payment without having to pay a significantly higher interest rate.  Here is a very helpful posting from Susanne, who successfully got her monthly payment reduced:

“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 since this all started. Has anyone else had a similar experience?”

Clearly, Chase is not making it easy for consumers to obtain these deals, as many people would hang up after being on hold for so long.  However, the fact that they are willing to make deals is the first positive news we have heard about this situation.  Just be sure to call when you have anytime minutes and time.  We hope to hear more from people who have had success dealing with the hardship department, although it truly is a shame that the hardships are being created by Chase and are not the fault of honest customers just trying to get by.

Lastly, in case a credit card company ever offers you a similar deal that allows you to transfer balances from a real fixed rate loan, such as a car loan, be sure to turn it down.  Chase offered Susanne a way to save money on her car loan, and then they asked her to make Mercedes sized payments on a Toyota sized loan.

The raising of minimum payments by Chase couldn’t have come at a worse time for those affected.  Many have seen minimum payments increase by hundreds of dollars, leaving them with mortgage sized credit card payments.  Unfortunately, these consumers are left with very few options, as many companies have made it difficult to obtain 0% balance transfers.  Additionally, many people consolidated large amounts of debt onto these low rate cards, expecting to pay them off over a long term period of time.

Given both the decline in 0% balance transfer offers and the large balances many of these Chase customers carry, there truly are very few good options available.  (And taking a second mortgage surely isn’t one of them!)

However, I located on credit card that still offers a 2.9% fixed APR for life on balance transfers offered by the Pentagon Federal Credit Union.  This seems to be the only credit card providing such deals, and may be a good option for consumers who are being pushed to the brink by Chase.  However, this card is only available to certain military or government employees.

Here’s a link to their website:  https://www.penfed.org/productsAndRates/creditcards/overview.asp

Lastly, if you have had success with this credit card or in getting your monthly minimum payment reduced, please share your experience so others can benefit.  This unfortunate decision has really put a lot of people in very tough financial positions.  Any help you can offer would surely be appreciated.

Chase’s 5% balance transfer fee will be the highest in the credit card industry and could pave the way for other credit card companies to follow suit.  However, the 5% balance transfer fee proposed by Chase may be less about squeezing a few more dollars out of consumers than it is about shutting down these transactions.  If consumers are willing to pay these fees, and many undoubtedly would to escape 25% interest rates, Chase can significantly increase their upfront fee revenue.  However, this may not be the reason for the increase.

Faced with a 5% fee, many consumers may opt not to use Chase for balance transfers, effectively limiting the bank’s exposure to these transactions.  Thus, without actually ending balance transfers, Chase may succeed in scaring away consumers looking to utilize their credit cards for these transactions.

Chase’s decision to increase balance transfer fees to 5% comes only a few days after Discover CEO David Nelms stated he wanted to cut back on balance transfers “dramatically.”  That banks clearly want to avoid low rate balance transfer transactions signals their continued fear of lending to consumers when 0% introductory rates are needed most. 

An often overlooked cause of recent balance transfer fee reductions (as well as the shortening of 0% interest rate periods) can be found in the Credit Card Accountability Responsibility and Disclosure Act.  This legislation designed to protect consumers has opened a Pandora’s box of unintended consequences by effectively (and fundamentally) changing the business model of credit card companies.  These changes, coupled with crippling economic conditions, have threatened to undermine the present and future profitability of credit card lending. 

Ultimately, banks will find a way to make money with credit cards again.  However, as they raise fees and interest rates, it is consumers who will paying more at a time when we cannot afford it.

“I just received notice from Chase Credit that they are adjusting everyone’s (Business and Consumers)interest rate by 2% regardless of credit history or balance. I love the idea that they can give out worthless 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.” See comment at http://www.smartbalancetransfers.com/blog/2009/02/chasecredit-card-low-interest-rates/

I followed up with the visitor via email and he elaborated on his comments, stating, “I spoke to chase twice this evening and they are sending this to all business customers and also the consumer card holders as well.”  The visitor also forwarded me a copy of the notice he received, which is posted below.

After gathering additional information, I contacted Chase and asked if my account would be effected by a rate increase.  The customer service representative stated that, “Chase will be changing terms on all accounts.  You will be notified by mail before any changes take place.”

I recieved conflicting information when I contacted Chase customer service via email.  They wrote to me:

“”Please be advised, your account is not currently subject to any change in terms for the Annual Percentage Rate (APR). Currently, the APR on your account is 13.24% variable for purchases and 19.24% variable for cash advances. You may verify these rates by comparing them to the information included in your monthly billing statement. As your account has a variable rate, your standard APR is based on the Prime Rate and may increase or decrease as the Prime Rate fluctuates.

As noted in your Cardmember Agreement, we may change the terms associated with your account and will notify you of the change in writing in accordance with applicable law. Any changes to your terms will be mailed to you prior to the change taking place.”

Given the conflicting statements from various customer service reps, its hard to say whether or not across the board changes are going to take place.  However, the reason stated for the rate increase is refreshingly honest.  As highlighted below, the rate increase was for the purpose of, “maintaining profitability on your account.”  Apparently, borrowing money for 0% and lending it out for 12% just isn’t good enough these days.  But hey, at least they’re being honest.

Click here for full sized image

Click here for full size image

If you have any information about an across the board 2% interest rate increase or general change in terms on Chase credit cards, please provide us with additional details and, if possible, email us a copy of the notice.  If you send a notice, please be sure to black out any personal information, such as your name or account number.

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.

However, as has been the case with Bank of America, Citi, and Capital One, Chase has lifted the maximum dollar amount on balance transfer fees to infinity.  For example, if you transfer a $5000 balance to the popular Chase Platinum Visa® Card, the cost will be $150.  Prior to this recent change, it would have been $99. 

As we’ve written recently, the credit crunch and resulting turmoil on Wall Street is having a very negative impact on the quality of credit card offers available, even to people with superb credit.  Unfortunately, things are likely to get worse.  Consequently, we continue to encourage anyone who is considering a balance transfer to do it now while decent, low fee 0% offers are still available.

April 28 2009 Update:  After a visitor posted on this site recently, I took a look at this posting from October of 2008 and really got a sense of how much the balance transfer landscape has changed, particularly in regards to fees.  Today, every major issuer is charging full 3% balance transfer fees on 0% deals and Bank of American has announced plans to raise balance transfer fees to 4% on June 1st.

While everyone enjoys being correct about a prediction, on this matter, I truly wish I was wrong.  Unfortunately, most of the dire predictions I began blogging about late last year are coming to fruition.  And, while my prediction that 0% balance transfers may soon disappear has yet to become completely true, these offers continue to be for shorter durations, regardless of the company.  So, lets all hope I’m wrong about 0% rates disappearing.