Did Your Bank Flip You “The Bird”?
After years of aggressive solicitations offering low balance transfer interest rates for the life of the loan, Chase recently sent thousands of its customers payment increase letters.
Here’s what it means on a monthly basis:
Balance: $10,000
Old Payment (2%): $200
New Payment (5%): $500
Previously, the amount of the payment was approximately 2% of the balance - now it will be 5% and the only way you can keep a lower payment is to close the account and take a higher interest rate.
I moved my car loan to a Chase card 2 years ago at 3.99%. Last month the payment was $187 and I paid $301.
Next month the payment will be $472!
I think I was targeted because I haven’t used the card for any purchases (that
wasn’t a requirement of getting the card or doing the balance transfer) so they’re trying to get their money back sooner and be able to use it on a more profit generating customer.
After months of watching the the banks get bailouts because they’re “too big to fail” all the while reducing credit limits and increasing interest rates, this is
the next version of “Flipping the Bird” at American consumers.
Along with the bailouts have come bank mergers so there’s less competition and they’re not worried about going bankrupt.
By the way, what they’re doing is completely legal and the new Credit Card Act of 2009 does not address this situation.
What can you do?
- Expect more banks to follow Chase’s lead - so it’s time to review your credit card balances and step up your efforts to pay them off.
- Look for smaller or local banks or credit unions willing to offer better deals.There’s a big vacuum coming in this area and hopefully other financial institutions will see opportunities the “big boys” are leaving on the table.
- Let your Senators and Congressional representatives know you are outraged when the big banks continue to take advantage of the American taxpayers.File a complaint with the Federal Trade Commission (FTC) at https://www.ftccomplaintassistant.gov.
- Be sure to read any letters or correspondence from your credit card company because it’s probably telling you that they’ve changed the terms.
- Adjust any automatic payments you’ve set up or they’ll sock you withlate payments and penalty interest rates.
- Stop using the card until the balance is paid off. Don’t close the account unless you have to because it can affect your credit score.
- If these increases in payment will put you over the edge, consider talking to a bankruptcy attorney. If bankruptcy is in your future, it’s best to do it early so you can get it behind you and move on to restoring your credit.
In the end, the days of easy credit with low interest rates and big limits are gone for now. Look to your spending plan to live within your means and get the debt paid off.
Listen to my thoughts on the changes we’ll see with the new Credit Card Act of 2009 at http://www.MendYourMoney.com/perfect.html.
Want to see how soon you can get debt-free? Find out with my Pay Debt Quickly kit!
Patricia asks: “Thanks for this very important information. I do have a chase account as well as my husband so this news concerns both of us. Let’s see if I understood right, to continue to pay at the lower interest rate, I would have to close my account and pay off the balance? Or, would it matter if I close or not?”
Cindy answers: Currently Chase is offering to close the account and change you to a higher interest rate in order to maintain a lower payment. This may be your only opportunity to keep the payments low. This policy can change at any time and may be different for another credit card.
Roni asks: “I notice that you say to not close the card, however I am wondering if there are not some situations that warrant it. I recently got notified from Capital One of a change that will increase my interest rate to 23% IF a payment payments are even one day late.
Then, you must make 12 “on-time” payments to restore your interest rate. With bill pay I have found that it can be a weekend or holiday or it can be close of day on the East coast (they find any reason), etc. and it isn’t difficult to have your payment fall one-day late for a variety of reasons.
This is absolutely corrupt as far as I’m concerned and I must either ‘opt out’ of this agreement and close my card or agree to it.
They have also raised my interest rate, but that I could live with since I’m not using the card anyway.
The fact that the credit card bill is a year away and it still doesn’t cover all the bases is a mystery to me.”
Cindy answers: “Making on-time payments every single month is the most important thing you can do to maintain your credit score and keep your interest payments low. Make your automatic payment go a couple of days early so you’re not late if the due date falls on the weekend or a holiday.
With the new Credit Card Act of 2009, your payment will have the same due date every month and if the due date falls on a weekend or holiday and arrives the next day it won’t be late.
Listen to the Credit Card Act of 2009 teleclass replay for more information on what’s changing on February 1, 2010.”
Something else you can do- DEFAULT – now. Instead of later. You may save your neck that way.
It’s something to think seriously about- the main reason defaults are rising- is that the discredited card companies are forcing plain, honest folks into bankruptcy; every day.
If you suddenly find yourself really struggling to pay your bills each month- remember who your friends are- and who your enemies are. And don’t wait until you’re up against the wall.
Guaranteed; this is what will happen: you’ll get a friendly call, hoping you’re well, and nudging you for payment. Then you’ll get angry calls for about 4 months; warning you that the world will end if you don’t pay up. Then they WILL give it to a collection agency, who will also threaten. Then- at about a year; they’ll start offering to settle for half; or a third; of the total. Every time.
And you won’t have had to pay them, for that year.
Yep; it’ll mess up your credit report and score. If that’s happening anyway – just what do you have to lose?
I have several friends that are being negatively impacted by the credit card companies. Most recently, a customer accounts were compromised. The credit card closed the accounts and reissued new accounts. In the transition of the banks actions the payments were late. As a result, several charges were added to the accounts (late payment, additional interest). Also the interest rate tripled.
The customers could not make the new payments. As a result of the banks action, the customers were forced to close the accounts. The bank required fixed payments that were not feasible to the customers. The customers were adament to set the payment amounts. The next option for the customers was bankruptcy. This was all a result of the banks actions and inflexibility to correct the negative impact of their actions.
I am seeing an increase in this behavior from the banks. Seems like the credit cards companies are legally being allowed to operate as loan sharks.
Wall Street ponzi schemes, legalized loan sharking…what will the consumers have to deal with next?
I have found that by re-adjusting my budget to make the day after the statement date “my” due date for payments, that I no longer have any problem with late payments, plus it does save some on the interest charges to pay ahead of the due date.
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