New WSJ piece on CC fees includes Chase bombshell: Life-of-balance promo users will face fees & 5% min monthly payments

The piece is here (subscription required).

Lots of old news, and then this bombshell:

J.P. Morgan Chase...will also start charging a new $10 monthly service fee to some cardholders who have been carrying large balances for at least two years, while raising their monthly minimum payments to 5% of their outstanding balance, from 2%...
Chase's new monthly fees and higher minimum payments will mainly affect customers who have been carrying large balances on cards with low promotional rates for at least two years, says spokeswoman Stephanie Jacobson.

"The total number of customers is relatively low, but the balances that these customers carry amount to billions of unsecured debt," she says. While these customers cannot opt out of the new terms, she says, they can pay off their balances or maintain their current minimum payments in exchange for giving up their promotional rates. A higher rate, however, means that more of a customer's monthly payment goes for interest and less to repay the loan.

Choosing to Decline
In some cases, cardholders may be able to decline the new terms -- although they'll typically have to close their account...
Has anyone heard more details about this?

Interesting that they are targeting "life-of-balance" offer users who've played by the rules Chase set. Many FWFers will want to monitor this carefully.

DaveHanson said: While these customers cannot opt out of the new terms, she says, they can pay off their balances or maintain their current minimum payments in exchange for giving up their promotional rates. A higher rate, however, means that more of a customer's monthly payment goes for interest and less to repay the loan.

Choosing to Decline
In some cases, cardholders may be able to decline the new terms -- although they'll typically have to close their account...

As long as cardholders can decline the new terms, its not really any more of a bombshell than any other CC change of terms we've seen recently.

Sure they will close the account, but issuers are going to be doing that to us anyways in the coming months.

And if you use your oldest cards for these offers, you will have to choose between the remaining offer and the effect on your credit. It's legalized extortion!

Creditboards has been discussing this for a few days. They are NOT letting people opt-out and keep their rate (they were letting some people that called in get 7.99% with no fee and no minimum payment increase). Some people have been sending their own opt-out notices in by certified mail to attempt to preserve their rights. This may end up in a class action suit. HSBC has traditionally been the largest issuer I know that has refused opting-out for contract changes......BOA Citi, and Chase have bee good about letting you opt out.. (if you get the notice in time and actually read it).....

I don't think you have to opt out. The terms are the terms you agreed to. Now one of those terms might be that if you use your card at any point, you're agreeing to the new terms. If you're like me and transfer a balance but never actually use the card again after that, they can't just change the contract retrospectively on you.

rooms222 said: Creditboards has been discussing this for a few days. They are NOT letting people opt-out and keep their rate (they were letting some people that called in get 7.99% with no fee and no minimum payment increase). Some people have been sending their own opt-out notices in by certified mail to attempt to preserve their rights. This may end up in a class action suit. HSBC has traditionally been the largest issuer I know that has refused opting-out for contract changes......BOA Citi, and Chase have bee good about letting you opt out.. (if you get the notice in time and actually read it).....

That would be interesting because I don't recall any change in the law that would prevent you from declining the changes, closing the account, continue paying offing off as originally agreed, and taking the hit on the utilization factor on the credit reports.

fck chase and wamu. what's a pos!

heathiopian said: If you're like me and transfer a balance but never actually use the card again after that, they can't just change the contract retrospectively on you.Umm, that is exactly what Chase is going to do.

PolarDude said: Interesting timing.. I noticed one of my payments dropped huge when I charged a small purchase to a 0% BT card, in which the purchased incurred interest at the standard rate, the payment dropped to "1% plus finance charges" instead of the old 3%. Nice loophole for those who are scared of the 5%, 4% and 3.5% I've been hearing about.
That's a good point PD. Purposely inflicting yourself with a little bit of finance charge has been noodled around with before as a way to keep yourself from being flagged as a "deadbeat", but it could have a very specific application to prevent Chase from douching you.

PolarDude said: Interesting timing.. I noticed one of my payments dropped huge when I charged a small purchase to a 0% BT card, in which the purchased incurred interest at the standard rate, the payment dropped to "1% plus finance charges" instead of the old 3%. Nice loophole for those who are scared of the 5%, 4% and 3.5% I've been hearing about.
PD, was this a chase card that switched from 3% to 1% + charges?

All my Chase cards have always been 2%, no more no less.

Would love to see confirmation that Chase will alter its minimums based on purchases made.

PolarDude said: Interesting timing.. I noticed one of my payments dropped huge when I charged a small purchase to a 0% BT card, in which the purchased incurred interest at the standard rate, the payment dropped to "1% plus finance charges" instead of the old 3%. Nice loophole for those who are scared of the 5%, 4% and 3.5% I've been hearing about.


Anyways this is a good move for JPM.. I noticed they are beating citi in mortgage rates today, and are set to dictate mortgages from here on. Doesnt look good for the homebuyer crowd.This should be good for the RedBox.

kaiotes said: shrugs

pay off ur bills all you deadbeats.

Troll award here!

But I'll bite. I have a Chase with 10k at 2% for life. I took that 10k and tossed it in one my savings accounts to earn 4%. I'm not a deadbeat, I'm just cashing in on an offer they made. I never miss payments.

gatzdon said: rooms222 said: Creditboards has been discussing this for a few days. They are NOT letting people opt-out and keep their rate (they were letting some people that called in get 7.99% with no fee and no minimum payment increase). Some people have been sending their own opt-out notices in by certified mail to attempt to preserve their rights. This may end up in a class action suit. HSBC has traditionally been the largest issuer I know that has refused opting-out for contract changes......BOA Citi, and Chase have bee good about letting you opt out.. (if you get the notice in time and actually read it).....

That would be interesting because I don't recall any change in the law that would prevent you from declining the changes, closing the account, continue paying offing off as originally agreed, and taking the hit on the utilization factor on the credit reports.

Yes there was a change. Minimum payments aren't cause for opt-out it would seem. If that is the case, your first scenario with no fee and no min payment increase could be temporary.

http://www.bankrate.com/brm/news/debt/20050722a1.asp

TIL allows fee hikes. They are trying to change (He noted that the Federal Reserve is now considering a change to its Truth-in-Lending rules that would generally prohibit rate increases unless the cardholder receives 45 days prior notice.

The notice would allow the consumer to avoid the rate increase by paying off the card balance or moving it to another card.) from here http://www.consumeraffairs.com/news04/2007/09/occ_interest.html

CURRENT RULES: from the fdic (http://www.fdic.gov/regulations/laws/rules/6500-1650.html#6500226.9)

(c) Change in terms. (1) Written notice required. Whenever any term required to be disclosed under § 226.6 is changed or the required minimum periodic payment is increased, the creditor shall mail or deliver written notice of the change to each consumer who may
{{6-30-06 p.6652.06-A}}be affected. The notice shall be mailed or delivered at least 15 days prior to the effective date of the change. The 15-day timing requirement does not apply if the change has been agreed to by the consumer, or if a periodic rate or other finance charge is increased because of the consumer's delinquency or default; the notice shall be given, however, before the effective date of the change.
(2) Notice not required. No notice under this section is required when the change involves late payment charges, charges for documentary evidence, or over-the-limit charges; a reduction of any component of a finance or other charge; suspension of future credit privileges or termination of an account or plan; or when the change results from an agreement involving a court proceeding, or from the consumer's default or delinquency (other than an increase in the periodic rate or other finance charge).

here is the part about renewal fees (it includes periodic fees):

(e) Disclosures upon renewal of credit or charge card. (1) Notice prior to renewal. Except as provided in paragraph (e)(2) of this section, a card issuer that imposes any annual or other periodic fee to renew a credit or charge card account subject to § 226.5a, including any fee based on account activity or inactivity, shall mail or deliver written notice of the renewal to the cardholder. The notice shall be provided at least 30 days or one billing cycle, whichever is less, before the mailing or the delivery of the periodic statement on which the renewal fee is initially charged to the account. The notice shall contain the following information:
(i) The disclosures contained in § 226.5a(b)(1) through (7) that would apply if the account were renewed; 20a and
(ii) How and when the cardholder may terminate credit availability under the account to avoid paying the renewal fee.

If you read the FDIC info, it seems the change of terms relating to finance charge or a new credit feature (as well as when they send a new card) is added to the account creates the requirement of disclosure.
(2) Whenever a credit feature is added or a credit device is mailed or delivered, and the finance charge terms for the feature or device differ from disclosures previously given, the disclosures required by § 226.6(a) that are applicable to the added feature or device shall be given before the consumer uses the feature or device for the first time.

but it doesn't say anything specifically about opting out

I'm one of the 3.99% lifers with a large balance for over two years. BUT, I didn't read the additional paperwork that came with my bill yesterday! It didn't seem t be anything unusual, it was a small piece of paper, about the size of the remittance stub...

Does anyone know how I can find out if I got "picked" to be part of the 5% minimum pmt, $10 montly charge group effective 2009? Without calling Chase?

I'm afraid if I contact them, they'll 'pick' me just for calling, even if I wasn't sent a notice in my mailing.

Any help on how to find out would be SO appreciated!

Actually, I was checking my online account as you wrote your suggestion.

According to my "View Statements" web page, there were no inserts included in my most recent statement (dated 11/16/08). As I look down the page, there are past statements which did have inserts, and they can be viewed (like a Global Account notice about Cash Advance APRs).

I am really hoping I wasn't part of the group to have their rates go up in January. I am too afraid to call Chase and find out...

I am still waiting for some clear evidence that on one of these accounts, making small purchases will cause the change in terms to go away.

Agreed that if any charge will do it, it's a bargain.

I received the notice in two different statements, one received on Saturday and one received two weeks ago. They are not showing when I check my online statements.

BocephusSTL said: .......It looks like I'm pretty well screwed on Card 1. I don't have another card with enough available credit to move the balance, and I sure as hell can't afford my min. payment going from $345 to $865. That's almost as much as my house payment! Unless someone else has some helpful information, I guess I'll have to give in to their extortion demands and give up my low BT rate for the higher 7.9% or 8.9% rate to avoid the higher payment - and pray that they don't do it again in a few months! Of course we all know how crappy Chase treats their customers, and once I accept the "new" rate, they're locked into the 3.9%/4.9% fixed for life rate, so they can go and change it whenever they want.

And finally, for those who have said the Change of Terms notices are not showing up online, it took a few days after I got my statement in the mail before the CoT notice showed up along-side the online statement.

You do have another option. Give up the card by rejecting the change of terms. There would be a small hit and from posts above, it sounds like people are having a hard time forcing Chase to operate within the law, but technically the law is on your side.

If you do challenge them by rejecting the change, please keep us posted.

gatzdon said: BocephusSTL said: .......It looks like I'm pretty well screwed on Card 1. I don't have another card with enough available credit to move the balance, and I sure as hell can't afford my min. payment going from $345 to $865. That's almost as much as my house payment! Unless someone else has some helpful information, I guess I'll have to give in to their extortion demands and give up my low BT rate for the higher 7.9% or 8.9% rate to avoid the higher payment - and pray that they don't do it again in a few months! Of course we all know how crappy Chase treats their customers, and once I accept the "new" rate, they're locked into the 3.9%/4.9% fixed for life rate, so they can go and change it whenever they want.

And finally, for those who have said the Change of Terms notices are not showing up online, it took a few days after I got my statement in the mail before the CoT notice showed up along-side the online statement.

You do have another option. Give up the card by rejecting the change of terms. There would be a small hit and from posts above, it sounds like people are having a hard time forcing Chase to operate within the law, but technically the law is on your side.

If you do challenge them by rejecting the change, please keep us posted.

Unfortunately, Chase isn't allowing anyone to simply opt-out of these changes (with the requisite account closing and payoff under existing terms that would entail). And based on previous postings with supporting links, it seems as if they don't have to allow opt-out. The only option they appear to be offering (according to a prior post) is to give up your low BT rate (and therefore your lifetime lock-in at that rate) for a higher rate, which they can change whenever they want. Of course if all their other nasty tricks fail, they could always lower my CL to below my current balance, forcing me into immediate default and thereby canceling any BT rates and jacking it up to the default rate.

To be perfectly honest, I'm scared to death to contact them about it, for fear of retribution. I called them once to ask for a modest CLI, so I could do a BT. Not only did they deny the CLI, but they promptly lowered the CL on all three of my cards as punishment for having the temerity to even ask!

I don't think there is any legal standing against them raising the minimum payment (to whatever they want, really). However, the monthly "service charge" is a legal gray area at best. The Change of Terms notice states:

"Your account has a service charge, which will be billed monthly (as stated in the Rates and Fees Table). This charge is owed whether or not you use your account, and you agree to pay it when billed. These charges are finance charges, and are added to the balance for purchases on your account."

So if the "service charge" is actually a "finance charge" that gets added to the balance for purchases (at a much higher rate than the BT), this would seem to be changing the lower BT rate that Chase agreed to be fixed for the life of the balance, AS LONG AS YOU CURRENTLY HAVE A ZERO BALANCE FOR PURCHASES. Of course, if you have any balance under purchases, they could claim that applying the charge to purchases doesn't alter your BT rate (even though that's the sole reason for assessing it).

Are there any attorneys out there who want to weigh in on this mess? I would also love to know if anyone has actually contacted an attorney to sue Chase. I would definitely jump on the class-action bandwagon. Not that any consumers would actually get any money out of it, but at least hopefully put a stop to this repressive action.

DavidScubadiver said: Send them an e-mail from your online account:

Hello. I received a notice that the agreed to terms and conditions on my account are being unilaterally changed by Chase to provide that ____ and _____. These changes would present a great hardship to me if they are applied retroactively to my existing balance which was incurred when the terms were not as Chase proposes to change them. I do not believe I agreed to allow Chase to retroactively change my terms when I have been honoring those terms to date. However, I understand that if Chase wishes to change the terms as they relate to future purchases, that seems fair enough - I will not make any future purchases on my card, and if that means you need to close the account while permitting me to pay off my existing balance on the terms I previously agreed to, you have my permission to do so. I cannot repay everything at once, nor should I be required to do so as we had a contract which permits me to make the minimum payments at the fixed rate, so long as I am not in default, which I am not. Please let me know how to proceed, and please do not charge my account any additional fees or otherwise cause me to pay more than i am required to pay under the terms we've previously agreed to. Thanks."

Good post, but I'm not sure if Chase has actually changed the terms of our agreement regarding my 3.99% BT interest rate until the balance is paid off. The rate will remain 3.99%; they just are demanding a higher minimum payment. The real question is, but I could be wrong (a good lawyer would know): Is increasing the minimum pmt from 2% to 5% of the OS balance for only those cardholders who have been carrying large fixed, low-rate, for-the-life-of-the-balance amounts a change in terms? If it is, then shouldn't we be able to opt-out and continue paying as we have until our cards expire? Or, is the notice possibly discriminatory, choosing cardholders only with BT and life-of-the-balance low interest rates?

Man, oh man, this is not a fun way to start a Thanksgiving holiday...

I would also be interested in contacting a lawyer who could answer these questions

Update: it was a coin toss and maybe foolish, but 0% APR (3% up front) BTed the payoff on the Chase 5.99% APR and added $8.00. Chase now shows it paid in full with a $5.00 credit. I expect to leave the $5.00CR alone until the next billing period. Then I'll spend any credit and drop it in the sock drawer.

I still have about $600 on a second Chase (FirstUSA) BFL 3.99% APR which I'm paying at about $20.00 per month. I expect to keep it so as I save up to pay the 0% APR BT off in 16 months.

I do not want to close them due to age of the cards. I doubt that I will use the 5% feature due to the rebate total required collect. Now if they do that for the dentist, I'll reach for it instantly.

Additional note:I learned the 5% is not credited each bill cycle. They credit 1% each billing cycle. The missing 4% is credited about 8 weeks after the end of the quarter.