Credit Cards » Credit Card News » Interest Rates For Credit Cards Rising Before Credit Card Bill Comes
Date July 8, 2009

Interest Rates For Credit Cards Rising Before Credit Card Bill Comes

Many thought that the credit card bill would be the end of high interest rates and fees in credit cards, not least among them the lawmakers in Congress and the consumer advocates who backed the bill aggressively when it was still being debated.

Interest Rates For Credit Cards Rising Before Credit Card Bill ComesHowever, the leeway of several months that government has given credit card companies to adapt their business to the new legislation seems to have had a very nasty side effect. Now, credit card companies are using the available time to raise their interest rates and fees way ahead of the scheduled activation of the credit card bill on the first quarter of next year in preparation for stricter laws about arbitrary interest rate and fee changes. Needless to say, many are irked by the fact but are quite helpless about it.

Recently, Chase credit card holders found themselves burdened with a nasty surprise from their Chase credit cards. Chase raised the minimum monthly payment required from 2% to 5%.  As a result, many card holders were trapped between paying very high minimum monthly payments or getting their interest rates increased by several percentage points. Many of these card holders were also those who transferred their balances to Chase to take advantage of a low interest rate offer.

Chase, along with Discover also recently increased their maximum fee charges for balance transfers. Chase’s rate was originally at 3% while discover’s was at 4%. Both companies increased their rate to 5%. Carriers of Bank of America credit cards also saw an increase for cash advance and balance transfer fees of 4%, from a rate of 3%. The majority of credit card companies are also continuing to cut credit card limits for their customers while steadily increasing their interest rates. The rate of the credit cuts and interest fee increases have noticeably increased since January of this year.

According to experts, credit card holders can expect to see these kinds of practices from credit card companies until February, when the credit card bill becomes active. At the moment, credit card companies are under no pressure to stop these kinds of practices and can continue to increase rates while decreasing available credit without any penalties.

The situation is exactly what many feared would happen if the credit card companies were given too much time before the bill became active. Now that it is coming true, legislators are effectively powerless to stop the continuing onslaught of higher interest rates, higher monthly payments and dropping credits. Once the credit card bill becomes active early next year, credit will have become too expensive for regular consumers and they will have too look elsewhere for the privilege of paying in plastic.

Date June 28, 2009

Chase Credit Cards Minimum Payments On The Rise

As the economic crisis continues, credit card holders carrying Chase credit cards are going to be in even worse condition. This month, Chase has just announced that they will be raising their minimum amount per month to 5%, up three points from the former 2%. Thousands of Chase credit cards are being affected by this worrying increase.

Chase Credit Cards Minimum Payments On The RiseThe increase seems minor to many observers and, in fact many Chase credit card holders will probably consider it as a mere annoyance instead of something serious like an interest rate or fee increase. However, for a select segment of Chase credit card holders, the effects of the increase are very disturbing.

The particular segment most troubled by the increase in minimum payment rates are those Chase credit card holders who are carrying large credit card balances and who are maintaining a very tight budget.

Chase customers who call up the company are usually told that the policy change is due to the economic slow down. Customers who tried to get Chase to lower their monthly payments were told that, while it is possible to negotiate a lower amount, Chase would increase their interest rate by several percentage points. Some customers report a rise to 21.99% from an original interest rate of 3.9%.

While Chase claims that the increase in minimum payments is due to the economic difficulties, an analysis from Consumeraffairs.com based on customer complaints show that the change has little to do with the credit ratings of Chase credit cardholders or how long their customers have been with them. Instead, the most common denominator among Chase credit cardholders complaining about their recently increased minimum payments is that they all mentioned that they took advantage of a promotion from Chase which offered a fixed rate at a very low amount. The offer was also given an extended time period.

There is a possibility that Chase is increasing the minimum monthly payment of their customers who have interest rates that are fixed and relatively low in order to increase collection of their low-interest profits. This will presumably be then rolled into loans with larger interest rates. Like most credit card companies nowadays, Chase probably wants to increase their profits now before the rulings of the credit card bill come into play.

Unfortunately, many Chase credit card holders are getting caught in a pinch. They have to contend with higher monthly minimum payments. If they want to keep their current monthly payments, they will have to deal with a much higher interest rate.