Your Bank Bailout Billions at Work

Shiny!JPMorgan Chase, which last fall quickly declared it would use its $25 billion bailout to add yet more names to its title, has also been using the time we bought to screw its long-term credit-card customers.

It’s a great scam. Chase spent years deforesting the world to mail low-interest balance-transfer offers to folks who enjoyed generous credit lines — from 2 to 6 percent interest for the life of repayment, in most cases.

If you did the math, even including the transfer fee, it was a sweet deal. Sure, there was fine print — always pay on time, lower-interest balances would be credited first, the usual. But as long as you played by the rules, you were safe.

Presuming, of course, Chase didn’t change the rules.

Which, for an estimated million customers, they have.

Here’s the trick: For years, the minimum monthly payment was set at 2 percent of the balance. But starting earlier this year, and reaching a peak this month, Chase has arbitrarily raised that minimum to 5 percent. So if you’ve budgeted for a $500 monthly payback, Chase’s Instant Karma hits you with $1,250 instead. Surprise!

Funny thing about that: minimum payments weren’t mentioned in the fine print. And unlike those exploding mortgages everyone talks about, there was no indication that “until the balance is paid off” meant “Chase is free to jerk your chain.”

But it’s not like Chase doesn’t care about you — they’re perfectly happy to lower your monthly minimum back to 2 percent. As long as you convert your balance to a much higher interest rate.

You got a problem with that? Fine. Get your own bailout.

Chase Cardholders See Payment Hike as a Raw Deal [AARP]

Stephanie Jacobson, a Chase spokeswoman, said most cardholders who received “promotional low-rate financing” over the last five years have paid off their loans.

“However, there have been a small percentage of customers that have not made as much progress in paying down these loans,” she said. “Our desire is to have these loans repaid in a reasonable period of time.”

Translation: we made a bad deal, so now we’re unilaterally changing the terms of the deal. Tough shit. Suck it up, buddy.

The sad fact is that the government has given Credit Card companies the right to do anything they want, and charge any interest rate they want. They’re pretty much above the law.

Visa’s just another word for Loan Shark.

@Benedick: Sure, but what does that have to do with banking in the states? Citi engineered a court decision in the 1990s arguing that the state laws on interest rates supersede the federal law, after planting their credit card operations in S Dakota where the industry had engineered the passing of legislation that removed interest caps. It went, I think, to the Supreme Court; Citi won and all the large issuing banks moved their credit card operations to S Dakota, at least until Delaware changed its laws to line up with the usurious S Dakota laws. I read my credit card contract all the way through and it allows the company to remove my eyes and skull fuck me to death at any time.

As regards Chase, who has their ad posted here, I must offer a word or two of bile. I have a credit card account from Chase. We got a great offer, “transfer your higher balance cards to us for 2.99% fixed until balance is paid off”. Couldn’t beat that. That was a few years back, and my wife had some credit debt from things like helping to get our daughter through college. So we ended up with about $20,000 on the Chase card. No frivolity, no trips to Cancun, no jewelry or furs (I guess furs are out these days anyway, and besides we live in Florida – furs would be too hot).

OK, so the monthly payments are (were) $440 a month, and my wife set it up so the payments are automatically withdrawn from her checking account. Payments are never late, there aren’t any other credit cards on which she has defaulted that could be used as an excuse for jacking her rates, there aren’t any charges from the local sex shop or from any downscale retail stores that might define her as a bad risk, nothing.

But there is that 2.99% rate.

Yesterday I got a call from my wife in a panic, her account was overdrawn, checks were being bounced. And she saw a withdrawal of $1,080 but didn’t know where it came from. A quick log-on to the bank showed that it came from Chase. A call to Chase, and the nice lady said “We sent you a notice in July”. Whatever the notice might have said, it didn’t say they were going to put us on the verge on bankruptcy, it didn’t say they were about to ruin what has for 40 or more years been a perfect credit picture, it didn’t say they were about to ruin our plans for retirement which are looming in the near future.

There’s simply no way we can pay their new MINIMUM payment. So I called them to see what the options were. The nice lady said “None”. The option that she omitted to mention of course is that we can join the 10% of Chase’s credit card customers who are now in default. And I would expect that many of those 10% aren’t deadbeats, more likely they are people who have lost their jobs, or people whose medical expenses have gone through the roof or folks who have had their credit card interest rates jacked up to 29.99% (can they go higher than that?) because they bought a sandwich at the deli and overdrew their account by $4.50 so Chase decided they were a bad risk.

The new credit card regulations that were just passed do have some benefits for consumers, but they don’t come into full effect until July of 2010. Until then the credit card pirhanas can smell the blood in the water that is coming from the only struggling creatures they have to devour, you and me !! Thank you Chase – as your ad at the top of this page says “We here for you” We just didn’t know it was for lunch!

Oh, said the nice lady on the phone “We didn’t raise your rate” (they couldn’t since that was fixed). They just cranked up the % of the balance that has to be paid off every month – something Congress didn’t think about in the new law ? Because they want to retire the 2.99% credit as fast as they can and move on to gouging granny for 29.99% because she needed extra medicine last month and missed a payment. “We here for you”

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