More consumers find credit card terms changed as issuers cite rising risk

Sweeping new federal rules aimed at banning controversial credit card practices don’t take effect until 2010.

But if you ask Jackie Jensen, card issuers are trying to throw in as many changes in account terms now before things tighten up.

The Rowlett resident and her husband, James, used a balance transfer offer on their Chase credit card that came with an annual percentage rate of 3.99 percent until the balance was paid off.

She was later shocked to discover that the minimum payment had soared from $116 a month to $288 a month.

Chase notified customers in December that it was raising the minimum card payment from 2 percent of the unpaid balance to 5 percent and was adding a $10 monthly fee that would start with the January billing cycle.

But the Jensens didn’t read the notice closely because of the holiday rush, she said.

“This was at the time that most firms send out their privacy notices, so we didn’t pay close attention to it and just filed it,” Jensen said. “During December, there’s also so much other mail with which to contend.”

She said that when she called Chase about the change, the customer service representative dangled another offer before her.

“If we agree to modify the interest rate to 7.99 percent fixed until January 2011, then they’ll allow our minimum payment to revert to the 2 percent that it has always been,” Jensen said. “In essence, they’ve got folks backed into a corner to extort agreement to this new deal.”

The Jensens begrudgingly accepted the higher interest rate. Jensen called Chase’s move “sneaky” and “underhanded.”

“By raising the minimum payment by over 150 percent on short notice, effective in January – when most folks are on a tight budget – they effectively force people to accept their alternate offer,” she said. “I believe their timing was deliberate – the timing of the mailing of the disclosure during Christmas rush and the effective date of the change.”

Chase officials said the change in terms that affected the Jensens will impact less than one-half of 1 percent of the company’s credit card accounts.

“Those who are impacted have carried large balances for over two years, while making little progress in paying them off,” said Stephanie Jacobson, spokeswoman for Chase Card Services. “We constantly evaluate the risks and costs of funding credit card loans. When necessary, we make changes to pricing, terms or credit lines based on borrower risk, market conditions and the costs to us of making loans.”

In today’s sick economy, those risk factors “take on added importance,” she said.

The skyrocketing unemployment rate is a huge factor, said Peter Garuccio, spokesman for the American Bankers Association.

“Banks/card issuers are reacting to broader forces,” he said. “The greatest single indicator of a customer’s ability to repay their debts is whether or not they have a job.”

So use your credit wisely and prudently.

“If you do anything to come across as somebody that is a greater credit risk, they’re going to increase your APR and/or cut your credit limit,” said Bill Hardekopf, chief executive of LowCards.com, a credit card information Web site.

Card issuers were taking those actions before federal banking regulators passed the tougher regulations on card practices in December, he said.

While that’s true, card issuers also have a wide-open window to implement new account terms before the tougher restrictions take effect in 2010.

“You can expect that they’re going to do as much as they can to generate revenue as much as they can,” said Curtis Arnold, founder of CardRatings.com, a credit card information Web site. “If they can slip one past you with a new fee, more than likely they’re going to try to do it.”

So read all notices that your card issuer sends you.

More consumers find credit card terms changed as issuers cite rising risk
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