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Chase Retracts Unpopular Monthly Fee on Some Accounts

Journal reporter Jane J. Kim writes:

J.P. Morgan Chase’s Chase Card Services is backtracking on a move to implement monthly fees on some cardholders’ accounts.

Starting in January, the company changed the terms on thousands of cardholders who had taken advantage of certain promotional offers in recent years. Chase raised their monthly minimum payments to 5% from 2% of their balance, and charged a $10 monthly fee.

Chase’s Stephanie Jacobson says the changes were aimed at customers who had made little progress in paying down their balances, and affected less one-half of one percent of its customers.

Now, the bank says it plans to drop the monthly fee and retroactively credit customers–starting with their April statements–for the $10 charges they paid in January, February and March. The minimum payments due will remain at 5% of their new balance.

The change in terms had angered thousands of consumers who had taken advantage of the bank’s balance-transfer offers–which had promised low fixed rates until the balances were paid off. In recent months, a number of class-action lawsuits have been filed against the bank for breach of contract.

Jacobson, who declined to comment on any pending litigation, says the company decided to stop charging the $10 monthly fees based on customer feedback.

Robert Lahm of Candler, N.C., who has been tracking the Chase lawsuits at his consumer-advocacy Web site, says there are at least a dozen such lawsuits that have been filed. Dr. Lahm, a professor of entrepreneurship at Western Carolina University, says Chase’s move raised his own monthly payments by nearly $400, to $600. As a result, he had to pull out money from his retirement account, incurring penalties and taxes. “It put me in a pinch and ruined Christmas,” he says.

To be sure, banks often change the terms of their cards, although many give customers an option to opt out of the changes and pay off their balances under their old terms and interest rates. In Chase’s case, however, customers had to give up their promotional rate and accept a higher rate of 7.99% if they wanted to continue to pay 2% of their monthly balances. Alternatively, they could continue to keep their existing interest rates, but had to pay 5% of their balances and the $10 monthly fee.

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    • I transferred my car loan to this greedy bank, and they said, hey 2.9%, pay back 2% a month, no annual fee, blah blah blah...then they did this to me. My car loan payment more than doubled, ending up being HIGHER monthly than it was with the original loan. Another instance of people with good credit who pay their bills on time every month being punished. What is happening to America? Can you imagine opening your mortgage statement only to find out your monthly payment more than doubled? Why do they think we are in this financial crisis to begin with?? My new password on the site is Chase s#$%s. And no, I'm not paying off my balance in full, that's what they want, is all their money in one lump sum. But for sure, I'll never have another Chase transaction or credit card in my life.

    • If Chase's statement "because of customer feedback" were true they would also revert back to the original rate of payback. WHATTA CROCK

    • Take a closer look at your statement. The fee is refunded, but you are still being charged a very high interest rate on the fee. I've got an additional $30 in my 13.49% category because of this fee. They refunded it but are still profitting off of it. I'm sure they also have some interest on that fee in my 13.49% category still. How sneaky!!!

    • yeah, i agree up until the $10 fee deal Chase definitely had bragging rights in the present banking community. I know someone who works for chase credit card and I hear that most everyone is tranferring their credit card debt to chase because the others have jacked the rates up so high. I guess I was interested in leaving a message because the news media does not do a very good job of pointing out that a LOT of very profitable banks like Chase were told by the government to take TARP money even after they refused it the first time. They were told by the government to take the money or be seen as unhelpful in what the govenment was trying to accomplish. Not every bank wanted or needed the money and many banks are returning it. This money is being paid back with about 5% interest. Thats money in the governments pocket to give to whomever they see fit. So yes the now rescinded fee sucked but look at it this way also...Chase was the ONLY bank financially poised to buy Bear Stearns and Washington Mutual at the governments request to avoid further financial disaster of bankruptcy and unemployment of 1000's of people. Not an advocate or Chase, but wish more people knew about the TARP situation.

    • I was one of the people who was targeted as well. I guess I should thank Chase for being greedy, since it gave me the extra motivation to: (a) pay off my car loan early, (b) transfer my credit card balance to a 0% offer and (c) close out my Chase account. As a result, I'll pay off all of my credit card debt ($11k+) by October. I guess it's no big loss for Chase to lose me as a customer since I vow never to charge more than I can pay off in full each month. But then again, Chase has lost out on merchant transaction fees it could earn from my purchases. Your loss, Chase.

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