Personal Finance: Ditch Your Credit Card as Fast as You Can

Posted on | February 10, 2009 | No Comments

JPMorgan Chase, the nation’s largest credit card issuer, has begun charging customers who took advantage of low promotional rates a $10/month ($120/year) fee. If you took advantage of one of Chase’s low promotional rate offers to transfer a large balance from another card, and you have carried that large balance for more than two years, you may be subject to this fee.

As scary as the $1o/month-fee sounds on its own, it gets worse! Chase is tacking the $10/month onto cardholders’ existing balances, increasing the balance and the interest owed.

And, if that’s not enough, Chase is raising these customers’ minimum monthly payment from 2% to 5%.

Lest we all implode on the spot, Chase offers these bits of conciliation.

The new fee only applies to customers who meet the above criteria, and have made little progress on reducing their balance over the two-year period.

The fee will apply to fewer than 1/2%to 1% of Chase’s 400,000 cardholders.

Cardholders who don’t want to pay the $10/month fee can choose to accept a 7.99% rate on the promotional balance.

Currently, Chase is the only card issuer with such a policy, but you can bet that, if it pays off either by reducing the amount of debt cardholders carry or by increasing Chase’s revenue, other card issuers will follow suit.

If you have a Chase card, you have a few options: (1) accept the fee or increased interest rate, (2) transfer the balance to another lower-rate card or (3) try to negotiate a settlement with Chase whereby you pay off all or most of the existing balance at the low promotional rate.

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