On Friday JPMorgan Chase said that it would refund fees to 400,000 cardmembers who were assessed a maintenance fee of $10 a month, according to a Dow Jones Newswires story. The fee, which was imposed back in January, targeted slow-paying customers who had low promotional interest rates. In addition to the monthly fee imposed in January, Chase also lifted monthly minimums to 5% of the balance, up from 2%. Today's announcement only pertains to the monthly fee. The 5% minimum payment will remain in effect.
From Dow Jones:But come April, Chase will double back on assessing the monthly service charges, and even refund previous monthly charges it posted to customers' accounts.
"Beginning in April, and based on customer feedback, Chase will stop charging the $10 monthly service charge and credit the service charges billed to date," a Chase spokeswoman, Stephanie Jacobson, told Dow Jones Newswires.
Jacobson said the decision to assess account fees at the rate of $120 a year applied to "less than one-half of one percent of our customers." The credit card accounts in question, she said, carry low promotional interest rates and are tied to "a small percentage of customers that have made little progress in paying down these loans.
"Our desire is to have these balances paid back in a reasonable period of time," Jacobson said. "The minimum payment due will remain the 5% of their new balance."
Read the entire story here (link).
UPDATE1: This is not in the story, but I figure my readers would want to know about this: Chase had every intention -- even after balances were paid off -- to keep assessing that $10 maintenance fee month after month. In other words, the $10 fee was going to remain forever -- with or without a balance. This was not a temporary fee that would have been assessed only while the balance existed. I imagine some people were going to be upset when they figured that out.
Chase's decision to lift the fees, though, makes that issue moot now. But at least you have some idea of what Chase was up to with this fee. I imagine most customers would have closed the account once they realized that there would be an annual fee of $120 in perpetuity. Probably exactly what Chase had in mind, too. Grab as much coin as it could -- while there was a balance -- and then get the undesirable customer to close the account after the balance is paid off.
UPDATE2: It turns out that Chase -- in part -- caved in because of pressure from New York Attorney General Andrew M. Cuomo's office. See press release here (link).
Related Articles:
Chase Adds Fee For Low-Rate Credit Cards
Change of Terms in Your Credit Card Agreement -- How Do You Reject The New Terms?
Friday, March 27, 2009
JPMorgan Chase To Refund Account Fees For 400,000 Credit-Card Accounts (Update2 -- Adds New York Attorney General Angle)
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48 comments:
Amazing what bad publicity and the threat of real regulation motivate these companies to do. CM, you no doubt helped bring this about!
P.S.: They should be required to back the minimum payment to 2% in the absence of a default, too.
DM, I am sure that lawsuit had something to do with it too. Would love to REALLY know what prompted this reversal by Chase.
Doubtful that it woke up this week and had a change of heart. Probably realized it had a tough case.
As for the minimum payment of 5% -- that will stick.
Why in the world would anyone want a 2% of balance minimum in the first place? Unless, of course, they're waiting for a more opportune time to default...
Anon, I think many customers were struggling with the 2% minimums. The 5% minimum probably pushed some of these people over the edge.
Anon, maybe some people were actually taking advantage of promotional rates where 2% minimum payments would actually be relatively advantageous for their bottom line.
And I think it was understandable why some of these customers weren't paying off the balances quickly. Some of these were "life of the loan" rates. Additionally, you wouldn't make purchases on these cards because you wouldn't want to trap purchases at much higher rates.
Chase made these deals. It did not want to live with them. It implemented those $10 fees and hiked minimum payments. It got sued.
It is now refunding the $10 fees.
Chase nixes $10 monthly fees, will credit accounts
http://www.creditcards.com/credit-card-news/chase-cancels-monthly-fee-1267.php
I think the minimum payment of 5% is good. A lot of people dont realize how bad credit can be when you are charge it all up then only pay 2% each month.
Chase set the APR, Chase set the life-of-balance terms, Chase set the 2% minimum, nobody twisted their arm. They hoped/expected that many of those who signed up for these BTs would later charge purchases on the same account, and the high interest from the purchases would be buried underneath the BT balance. They underestimated many of these customers (myself included) who used the BT as a low interest loan for home improvement or other projects, and aren't stupid enough to charge purchases on a BT card. I'm certain the multiple lawsuits caused the U-turn. - Revike
Revike, we're in agreement. Nice seeing you in these parts. Stop being such a stranger!
Notwithstanding a low promo or some sweet deal Chase reneged on and should be held responsible, I think most 2% minimums are what help perpetuate the "evil" CC syndrome. Naturally, they wouldn't axe 2% that was allowing them to lap up gravy interest while barely grazing on the principal. Even though Chase offered this I can't help but think of ye olde; if it's too good to be true then it's probably BS. Doesn't this go back to the fine print of, "we reserve the right to change yada, yada, yada"? If I'm missing something, by all means, let me have it right between the eyes.
Which brings us to the square on the board known as, "What can you afford or why are you using a CC for a personal loan vehicle"? It would appear, to me, that the majority of folks only maintaining a 2% payment are in a never ending rut of slow death. They can't afford the note and, yet they can't afford not to pay. Isn't this easy payments run amuck? I'm sure there are exceptions to the rule, but this line of thinking has me wondering why; You load sixteen tons and whatdaya get?
Another day older and deeper in debt.
Tell St. Peter I can't go.
I owe my soul to the company store...
Anon, because I never saw the original agreement with Chase, I can only guess. But based on other agreements, I think I can make a good guess.
This is probably what those agreements said. You can have this "life of the loan rate" as long as you do not default. Your rate of 1.9% (or whatever it is) will remain at 1.9% until the loan is paid off. When customers were induced (legal term) to accept the offer, there was no mention of a $10 fee.
As for the minimum payment, that was likely left open -- meaning that Chase reserved the right to change minimums at its discretion.
When Chase implemented that $10 fee, it breached its contract with the customer (the legal argument that has been made).
This whole thing is one reason I quit using my chase freedom card-even though it has decent rewards.
Costco Amex has gotten better rewards, though they are having their PR issues as well.
Thinking this might me my weekend for PenFed-My Refi was approved today so I can now apply for a new card :)
Enigma, I was turned down for PenFed 5 months ago for too many INQ's. I just noticed, out of the blue, 2 AR INQ's from them this month. My score has improved and a couple of hards fell off of EQ since the denial. I'll keep my fingers crossed for you if you do the same for me!
Good luck to both of you. The Penfed cash rewards card is excellent.
Clutch,
what is AR inq? And did they tell you the reason was too many inqs? How many did you have?
Thanks CM, it's funny how I don't mind PenFed sniffing around my reports one bit!
Clutch
got me all self conscious now (or gun shy:) )
AR=account review. Penfed just peeking at Clutch's reports this month.
Account Review. They are checking me out. I hope it's because they are thinking of asking me out!
And yes, they said I had applied for too much credit recently. I had 5 EQ inqs
OMG... I just applied online for that penFed cash card. Auto approved for $10k. I can't believe it! I'm finally part of the family!
Good luck Enigma.
PenFed... worth the wait.
Congrats, Clutch. Enjoy the card. It's a no-nonsense card. You get 5% back for gas, 2% for groceries at the supermarket, and 1.25% for everything else. The cash back is credited back each month and used to knock down your statement balance.
My white whale conquered. I wanted to post this so that Enigma didn't feel discouraged. I am also now qualified for a $38k auto loan.
Varoom!
Chase is full of it. Nice try at turning legal defeats into "we listened to our customers". No they didn't, they attempted to get the class actions filed over this tossed out of court in favor of their kangaroo court (arbitration). They lost in several cases in the last few weeks and this decision was not based on what is good for their customers but rather what is good for them as they would have paid a tremendous amount to not only defend the suits but ultimately to the plaintiffs and their attorneys.
-- Shawnee
Shawnee, yep. Chase had a weak case. This was the best it could do.
Clutch-
Hey Penfed... Worth the wait!
Since this is a thread about slogans, maybe that should be PenFed's "unsolicited" suggestion :)
How did you find out the were ARing you? I might have like 3 hard inq right now because of my refinance and I took a department store charge for 90 days SAC on a replacement wedding band I just bought for $190.
Actually, this is the slogan thread:
http://www.creditmattersblog.com/2009/03/have-you-been-sending-unsolicited-ideas.html
Enigma-
On your credit report AR's show as a type of soft inq (Inquiries that do not impact your credit rating). Look at the code assigned to each one. PRM=Promotional, EMPL would be an employment etc.
It's amazing what these companies will come up to try and jack their customers... I wonder if they will be voluntarily giving the credits, or if the customer has to call in for them? If the latter, Chase probably made out pretty well on this debacle.
Also, Enigma - you took a hard for a $190 purchase?! I know there are plenty here who would gladly PAY $190 to have a hard removed from their report...
Yeah well I guess I don't care as much as some. I am in the 760-780 range and just re-fied my home so not really sure why I need an 800 right now.
Hopefully my next mortgage will be when the kids are gone and for a Condo somewhere with a water view and NO yard maintenance :)
CM-
My bad on the suggestion thread-forgot where I was :)
Too many posts from work yesterday :O
Sure will be glad when tax season is over!
Enigma, no worries on the wrong thread/right thread. Just wanted to make sure we didn't go too far with our off-topic chatter.
Chase sure did "chase" me down when they sent me the offer, sending me solicitations week after week, eventually lowering the interest rate to 2.99%. I had great credit and no need for a loan, but my husband and I borrowed the max on my Chase and his Chase card, and refinanced our mortgage! 2.99% was much less than we were paying--even after the tax deduction--and there were no closing fees. Now we are one of the "less than 1/2% of Chase customers" who are being charged $10/mo and had our monthly payment raised to 5%. The only people who received these offers were those with high credit scores, and now these are the customers Chase wants to get rid of! I'm sure it's because, as someone else mentioned, we beat them at their own game by not using the card for purchases and by never missing a payment.
CM, I was the one who posted on the previous blog you did about Chase that I rec'd a letter from them after inquiring with the law office doing the class action lawsuit. I'm with 11:19 that our credit was great so this is so funny but technically we were slow payers so I can see them making this move. We are now totally aggressive with all our debt so it will truly be a moot issue soon. Regarding the 5%, Chase did indeed return it to 2% per their letter to us. But, like I mentioned, too little, too late, I'll pay it, use it minimally just to keep active so I don't take the hit to my FICO but will never do the same mistake again. We have excellent credit and plenty of it but have not been prudent with its use in the past. That's changing we are now on the cash only basis and when I pay off my house and have plenty of money in the bank I will tell all credit cards to kiss my b**t! I am sick of these shenanigans and constantly having to monitor FICO, statements, etc. Sorry about the vent but thanks again for all the good information! Lolo
I'm glad this didn't stick as an industry precedent. I'm nursing a 0% for life balance transfer that I put on a Citi dividend card several years back. It's set to autopay the minimum, which is something like 1.2% of the balance. I won't pay it off just as a matter of principle.
Sharing my story:
I had a 2.99% for life balance plus another 3.99% for life on two cards with Chase. I used the money to start my small service business, as it was not possibly for me to get a small business loan with no hard assets. I have a high credit rating (low 800s), never missed a payment on anything in my life. I was paying off this debt at about 3% to 4% per month, but occasionally would drop in down to 2.5% for a heavy expense month, such as April taxes. I'd paid off around half of it, when I received the notice about the $10 fee, 5% payment, and decided enough is enough.
I contacted a wealthy friend who gives small business loans, and arranged a low interest unsecured loan (with formal contract) at a flat monthly payment rate. I paid off the chase cards in December, and spoke with Chase and managed to get them to drop the $10 monthly fee. They also dropped the minimum payment back to 2% Their requirement was that any "for life" balance and purchase now be at 7.99%. I've kept the cards open for credit rating purposes; and in January they increased my credit to $25,900 on one card alone (go figure!)
Needless to say, I have no plans to ever use the Chase cards again, except the occasional purchase to keep the account open. Chase lost all the interest this good customer would have paid them. I am happy that my relatively small interest payments are going to someone who I know and who is doing good in the world.
What's the likelihood that Chase will allow a return to original terms for people who were coerced into accepting a 7.99%? I've got two cards with them that had life of the balance rates at 2.99% and 3.99%. I accepted the change on one and moved aggressively to pay down the other. If I'd had the guts to stand pat, I'd be in a better position now.
Not sure what's going to happen to those who decided to allow their terms to get changed. I'd call and ask about that.
Interesting! Of all the issues I've had with credit card issuers, my Chase card hasn't given my a single one! I have noticed the minimum increase, but that's no big deal since I pay the balance in full every month. But, I guess I missed the boat on the $10 fee...thank goodness!
Thanks for the update, though. I used to work for Chase and I'm not at all surprised by what I've read here.
ATTORNEY GENERAL CUOMO SECURES AGREEMENT FROM CHASE BANK TO END MONTHLY FEES ADDED TO 184,000 CREDIT CARD ACCOUNTS NATIONWIDE
http://www.oag.state.ny.us/media_center/2009/mar/mar30a_09.html
Interesting articles, thanks.
b_in_sc
Glad you enjoyed it, SC.
They put my minimum back to 2% also ... I, too, am curious about what will happen with regard to those customers who allowed their rate to be increased. I just paid the 5% when they implemented the scam so I could keep the low APR.
I am one of the people that had 3.99% for life and accepted the 7.99% APR, as I wanted to pay off the account and did not want to continue to pay $10/month or close the account and hurt my credit. The month after I paid it off, I was charged the 7.99% interest for the previous month's balance. They have not refunded the difference for me. I wrote to customer service, who forwarded it to someone else and said they'd respond within one day. Three days later and still no response. What really stinks is I could have used the money to pay off another credit card with a 6.9% interest rate, so now I'm stuck paying 6.9% instead of 3.99%.
Glad to here the $10 fee was refunded.
In my case I did not want to pay the fee,so I paid the credit card in full and closed my account.
I had a $25,000 credit line.
I only owed $7,200.00 and have been a chase credit card customer for 14 years.
I no longer do business with chase.
I closed my WaMu checking and savings account.
Chase lost me as a customer.
I hope something happends so I can get the credit line back. I don't want there money,just the credit.
Because of Chase abuse of a customer. I stopped using credit cards as much as I used to. I only charge a few hunderd a month instead of a few thousand.
Chase needs me more than I need them.
This comment is for the three people above (Shane, and two anons) who posted variations of: "You should be glad that Chase is demanding nearly-tripled minimum payments, because when you were only paying 2%, you were barely grazing the principal."
All three of you are completely misinterpreting the situation (or maybe you're just failing to do the math).
Sure, if your annual interest is 22%, then when you pay 2% x 12 = 24% annually you are barely grazing the principal.
But my annual interest wasn't 22%, it was 2.99%. So when I paid 2% x 12 = 24% annually, approximately SEVEN EIGHTHS of every payment was going straight to the principal!
The Dimon gang's repeated accusation that "these people were making little progress" is just a lie. A deliberate and premeditated smear campaign, carefully designed to lure people like the three of you (and, more importantly, people in the media) into exactly the kind of sloppy thinking that you demonstrated above: "Gee, those people were making little progress when they were paying 2%... I guess kind-hearted old Chase is really doing them a favor, by demanding lots of their money!"
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