Finance articles and news

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.

read more related posts:

1. 15 important credit card terms to consider before buying a credit card!!

   By Thomas Lindstrøm A credit card is a form of borrowing that often involves charges. Credit terms and conditions affect your overall cost. So it’s wise to compare terms and fees before you agree to open a credit or charge card account. The following are some important terms to consider that generally must be disclosed in [...]...

2. 15 important credit card terms to consider before buying a credit card!!

   By Thomas Lindstrøm A credit card is a form of borrowing that often involves charges. Credit terms and conditions affect your overall cost. So it’s wise to compare terms and fees before you agree to open a credit or charge card account. The following are some important terms to consider that generally must be disclosed in credit [...]...

3. Who Has Got The Ultimate Credit Card Around

   It more than likely goes without saying that there isn’t any such thing as ‘the best credit card’. What will suit some individuals may be entirely unsuitable for someone else.When hunting for ‘the best credit card’, then, what we are really looking for is a card which, amongst all the varieties currently available, matches [...]...

4. Get Out Of Credit Card Debt – 5 Helpful Hints

   Credit card debt can pile up quickly and be overwhelming to the average individual who has difficulty controlling daily spending habits. Unable to keep up with the required payments to one credit card company, these same individuals accept credit balances with several companies, opening up too many possibilities for spending and starting a downward [...]...

5. College Student Credit Card Debt. Tips For Parents

   For parents college can be expensive, however for the college student, credit card debt seems to come with the territory. Do students and credit cards go well together? If you’re starting at a university and beginning to ease into a situation where you will be in charge of your own money,college student credit card debt [...]...

6. Which Small Business Credit Card is Right For You And How To Tell

   There is much advice available about how to find the small business credit card for your company and most of this advice tends to include phrases such as ‘using your credit card wisely’ or ‘well-managed business card account’. There is also a lot of jargon surrounding the cards themselves, sometimes making it difficult to discern [...]...

7. Three Steps To Reduce Credit Card Debt

   There can be an array of ways to reduce credit card debt. Many credit card companies these days try to attract consumers through gimmicky promotions, such as cash advance checks and very low introductory rates. The low introductory rates often turn as high a rate as 30% or 40%. Because of the eventual high interest [...]...

8. Tips On Using Your Credit Card Responsibly

   The recession has made us all tighten our purse strings, and that includes the number of times we use our credit card. However, don’t put them away for good as they are still a convenient, and sometimes rewarding, way to pay – as long as you use them wisely. Follow our top tips to using your [...]...

9. Credit Card Debt Relief-What You Can Do About It

   If you have found yourself living with credit card debt then you are not alone; many families are now experiencing severe financial problems. With the debts rising, it is not surprising that individuals have started to realize the financial problem they have created by the constant and indiscriminate spending they have carried out. It now [...]...

10. Applying For A Credit Card? Apply Online

    The invention of the Internet has changed the lives of people all over the world. It has an enormous contribution to the development of the society and has lightened business transactions. When you are online you can do almost whatever you want, for example applying for a credit card and you can do it [...]...

Tags: card issuers, chase credit card, credit card practices