Chase Won't Hike Your Credit Card Rates If You Screw Up On Another Bill
Filed in archive Credit on November 19, 2007
To its credit, Chase is ending a credit card practice that has had some consumers fuming in the past, both at Chase and other credit card companies that use it (which is most of them). Here's what they do that they're going to stop doing... Say you have a Chase credit card and you are late on your car payment, or you miss a payment on your American Express card. These late or non-payments then show up on your credit report. Chase is alerted to the change in your credit score, and then decides to hike your credit card's interest rate as a result. Yes, you didn't screw up on your Chase account, but you screwed up on other accounts, and so your interest rate goes up. Hardly seems fair does it? Well, at Chase at least, it won't be happening anymore (or at least not after March 1, 2008).
I commend Chase, because many companies give themselves the right to hike rates based on changes in credit reports, and Chase is (I think) the first to decide to stop. But the fact that this is newsworthy sort of shines the light on the many card company practices that leave their customers red-faced.
The question most people would have is, why do these companies have such a policy in the first place? The companies will say that this is a way to protect themselves, because if a customer is having trouble making payments elsewhere, then it stands to reason that the customer is becoming a greater credit risk. This makes some sense, but is it fair to jack up the rates on someone's existing balance, when the original agreement included a lower interest rate on those purchases? It would make more sense to simply shut the account down and force the customer to pay the existing balance. But of course that would make the card company less money.
I try to be even-handed in my coverage of the credit card industry, because it indirectly pays a large part of my salary and also because I think the industry is sometimes subjected to the pile-on effect, in which only the evils are highlighted and the benefits that many people get from credit cards are ignored. That said, credit card companies have come up with some nutty policies to make extra money and slipped them into the fine print, often in legalese that the average consumer can't grasp or has to spend hours sifting through to find the important points. And it appears the recent Congressional threats against the industry in general have been the impetus for some of the self-policing we're now seeing.
The smart credit card companies are at least tooting their own horn when they change some of the more bizarre practices. Might as well at least get some good PR from it.

Tags: credit card chase dollar liberty credit+card liberty+dollar dollar+alternative
Vote for Chase Won't Hike Your Credit Card Rates If You Screw Up On Another Bill:
|
Rating: 4.00 out of 2 vote(s) cast.
|
Response from:
Tom
(11/19/07 9:02pm)
I never understood this practice either. I have a lot more respect for Chase after they implemented this. I've always thought of myself and my business. As long as my customers continue to pay me on time each month, I really don't care about their other bills. As long as they pay me on time, that's all that matters, right? ;)
Response from:
aduphily
(03/03/08 8:35pm)
I had read at bankrate.com that chase was changing the way they calculate our APRs. "As of March 1, they will no longer change your APR based on a declining credit score. Your credit card account will be judged solely on how you manage your accounts with Chase."
Just got off the phone - my third call this afternoon! As of my current statement, they have decided to jump my rate from 7.99% to 17.99%! Supposedly, they sent a letter last November informing me of this - I think I would've noticed something like that! The only remedy they were willing to offer was a phone number for a credit counselor.
Amazing isn't it! My rate gets upped after years of on-time payments, because my credit score dropped from 786 to 679 due to being laid off - the same month they announce they will no longer be doing this! Having no income certainly plays games with your debt-to-income ratio... No matter that even with being unemployed, I have MADE SURE that not a single payment has been late - with anyone!
On top of all that, I check my credit report and find that an account I had closed with chase in Dec 06 was still listed as open! No apologies from them on that one either...
Just got off the phone - my third call this afternoon! As of my current statement, they have decided to jump my rate from 7.99% to 17.99%! Supposedly, they sent a letter last November informing me of this - I think I would've noticed something like that! The only remedy they were willing to offer was a phone number for a credit counselor.
Amazing isn't it! My rate gets upped after years of on-time payments, because my credit score dropped from 786 to 679 due to being laid off - the same month they announce they will no longer be doing this! Having no income certainly plays games with your debt-to-income ratio... No matter that even with being unemployed, I have MADE SURE that not a single payment has been late - with anyone!
On top of all that, I check my credit report and find that an account I had closed with chase in Dec 06 was still listed as open! No apologies from them on that one either...
Response from:
Audra
(03/19/08 3:02pm)
No, they just hike up your interest rate for no reason at all! I have had a card with them for 10 years and they just raised my rate to 29.99%!!! Even though I haven't had any late payments in 10 years. Their explanation? I'm more 'risky' now. Hmm... payments on time for 10 years sounds pretty risky to me.
Response from:
c-shi
(12/24/08 5:56pm)
I just noticed that Chase raised my rate to 19.9% from 9.9. I called and they told me that that was just a raise for EVERYONE across the board! Can't someone do something about this????
Response from:
club penguin
(05/19/09 3:44am)
I have a lot more respect for Chase after they implemented this. I've always thought of myself and my business. As long as my customers continue to pay me on time each month, I really don't care about their other bills.
Response from:
Naser Hussein
(05/28/09 7:10pm)
Chase Hiked my card interest for May from 9.99% to 19.99% even when I never was late in any payments but because I have late mortgage payment due to being laid off. I thought the new law would not allow that.I called their CS and they told me that they have send a notice in the middle of March informing me with the increase which was not true
| RSS | |
|
| |
| Yahoo! |
|
| Addthis |
|
| Bloglines |
|
| Follow us on Twitter! |
Most Popular
About This Site
Banking
Best of
Blogging Issues
Book Reviews
Buying Stuff
Careers and Money
Charity
Credit
Did you know
Economy
Education
Finance
Financial Advisors
Funny
General
Greatest Hits
Happiness
Health
Housing
