Chase made sweeping changes across its credit card accounts in 2009, raising credit card rates for both personal and business lines of credit. The changes, however, did not affect everyone. Chase is considering various factors when deciding which accounts will be affected by a rate increase or other changes, according to an article in the Wall Street Journal (WSJ).
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The factors Chase considers when deciding if changes should be made to a credit card account include market conditions and the amount of risk they are taking for extending the credit to the particular customer, the WSJ noted. It is also taking account how much each loan or line of credit is costing the bank itself.
How to Know if Your Chase Credit Card Rates are Going to be Raised
Credit card issuers typically alert customers in advance about an increase in interest rates or other changes to their account. Chase followed suit by doing the same for the credit card accounts to which changes would apply, the WSJ said. Chase noted it would send written notification to customers who would be seeing an increased credit card interest rate, at which time the customer would have 45 days to opt out of the changes by closing his or her account.
Increased interest rates are not the only changes for certain Chase customers, another Wall Street Journal article noted. Other credit card holders found themselves facing an increase in fees and minimum payment amounts.
Their changes specifically involved a newly added $10 monthly fee and an increase in their minimum monthly payments to 5% instead of the former 2%.
Cardholders that were affected by the increase in minimum payments were those who were still in the low interest rate promotional period, and they had the opportunity to opt out of the changes by vying for an alternative. Their alternative was to avoid the monthly $10 charge and increase in minimum payment amount by instead choosing to increase their annual percentage rate to 7.99% during the introductory period.
The APRs after the introductory period would switch to whatever was originally stated in each specific credit card agreement. Regardless of what changes the affected customers selected, they would likely end up paying more than they did prior to the changes. Those affected by the increase in fees and minimum payments accounted to fewer than 400,000 credit cardholders who were slow in paying off large balances that dated back for more than 24 months.
This is Legal under Existing Laws
Federal rules do protect consumers from sweeping changes to credit card accounts, which can include a hike in the interest rates, a sudden, drastic cut in available credit or annual maintenance fees similar to Chase’s $10 monthly charge. There is, however, a catch.
Chase and other banks made such sweeping changes in 2009, prior to the slate of rules protecting consumers went into effect in February 2010. Credit card accounts opened after February 2010 have enhanced protection over than those that were already established before the new federal regulations were enacted.
Protections Offered by the Federal Rules
The federal credit card rules covered a wide range of territory in efforts to better protect the consumer, according to Consumer Action. Several of the protections pertain to interest rates.
Fixed interest rate credit cards cannot raise your rate on existing balances unless you are more than a month late with payments. Fixed interest rate credit cards must also provide written notice 45 days in advance before changing your interest rates on future purchases.
Unless the credit card company specifically notes an interest increase is in store when you establish a new account, you are safe from interest rate increases for the first year of your account.
Credit card companies are also not allowed to charge interest on balances you previously paid off, a practice known as double-cycle billing. They must also notify cardholders 45 in advance before imposing a penalty interest rate or making most other changes to your account, Consumer Action says.
The new rules touch on payments, as well. Credit card companies must provide ample time for you to pay your bill by mailing your statement 21 days before payment is due. If they fail to mail your statement with such an advance notice, they are not allowed to charge you a late payment fee.
The new rules apply to Chase credit cards and all credit card accounts opened after February 2010. Although successfully budgeting your money is still up to you, the new rules at least afford protections not previously in place.
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