I received a letter from Chase stating my payment would be going from 2% of the balance to 5%.  My payments will go from $108.00 to $272.00  I currently have a 3.99% until the balance is paid in full. The only option I have to lower the payments back down is to surrender my 3.99% to a 2 year 7.99% and then it goes to 17.99%.  I’ve never missed a payment and I have excellent credit.  I am also on a limited income and feel I am being forced into a contract I don’t want.  Who’s to say they won’t change it again and again. How can this be legal?

The frustrations felt over changes to credit card terms have been quite pronounced. This is because the fine print in the credit card agreements you sign basically says that credit card issuers can change the terms of the credit agreement at anytime and in any way. You agree to this when you sign your name.

Of course, the latest credit card bill, the Credit CARD Act, provides some protection for consumers, but Chase chose to send most notices of these changes before last week’s deadline that requires credit card issuers to give you 45 days notice on major changes to credit card terms. This because any changes made after August 20, 2009 have to be given well in advance, and accepted by customers. If the changes are not accepted by customers, they can close the account and pay it off under the old terms. Obviously, Chase is playing a very clever game here, by forcing clients into a situation that means more money for Chase — either in the short-term or in the long-term.

Coming up at the beginning of the year, in February 2010, credit card issuers will have to regularly evaluate your account and your credit to determine whether or not you should get an interest rate reduction based on your status as a good customer with good credit. This might be helpful in terms of the 17.99% rate that comes in two years, but is not particularly helpful right now. You might ask if you can close your account and finish paying off the balance at the lifetime agreement, and with the old minimum payment, but this may not be an option.

In the end, credit card issuers are in control. Indeed, anytime you are in debt, someone else has significant control over your finances. It may not be fair — especially if you are a good customer doing the best you can — but that is the way it is. And, even when all of the new rules come into effect from the Credit CARD Act, the credit card companies are likely to introduce new measures. There is a great deal of speculation that they will come up with a new way of figuring credit card interest rates without having the basis on the prime rate, so that even if you do deserve a lower interest rate, the way it is figured may still result in higher rates across the board.

In the end, you either have to accept the changes or trade in your low rate for a higher rate to keep your minimum payment low. If there is any way that you can afford to make the higher minimum payment, that is your best option. This is because it will, in the long-term, help you pay off your balance faster and pay less in interest overall. Chase gets short-term gains and a boost to the quarterly bottom line, but you pay less in the long run by keeping your 3.99% interest rate. If there is no way to make the higher payment, then you may have to swallow the 7.99% rate and try to pay it off in two years (or pay the 17.99% rate after the two years are up). This means that you pay more over the long haul, and Chase makes more money in the long-term, even while getting less in the short-term.

You can also try to transfer the balance to another card, which will have to abide by the new credit card rules right now. If you truly do have good credit, getting a good rate on a balance transfer should be doable. But it may not be a lifetime rate.

Image source: richardmasoner via Flickr

Post from: EveryJoe

Chase Minimum Payment Increases