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valleyval
June 25, 2009 6:45 PM
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Wow, so you must know the OP's situation really well huh?

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2 replies
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Josh Saint Jacque
June 25, 2009 9:14 PM
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@valleyval:
What situation could justify $25k in credit card debt and then making no effort to pay it off? Stop pretending debtors can do no wrong.

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floraposte
June 25, 2009 11:35 PM
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@Josh Saint Jacque: First off, the whole point is that the OP was paying it off and now can't.

Secondly, as is posted several times here, a critical care medical bill will send you to $25,000 in a heartbeat, sometimes literally, whether you have insurance or not. I will attribute your ignorance of this fact to your profound good luck, and I hope you appreciate that fortune.

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ohenry
June 26, 2009 2:22 AM
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@floraposte: +1 internet to florapaste's comment.


+1 douchebag to Josh's.


Like Flora said, let's all hope that you don't have a circumstance such as a medical emergency come up and force you into debt, lest it shatter your naive view of the world.


It's not to say that the OP WASN'T living above himself, but there is no evidence stating that he WAS, and we ought to give him the benfit of the doubt.

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B
June 25, 2009 6:46 PM
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Five percent is still too low. Also, they have an outstanding balance close to 20k? I hope it's a really low promotional interest rate.

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6 replies
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YouDidWhatNow?
June 26, 2009 3:43 PM
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@B:


My BOA card offered me 0% interest for 12 months on my entire credit line of $45,000.


So I used their money for free for a year, and then paid it all off in the 12th month, and they got nothing for it. I don't recall what the minimum payment amount was, but it wouldn't have mattered to me at that time if it ws 5% or not...

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K-Bo
June 25, 2009 7:30 PM
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@B: Exactly, I'm no math major, but with 5% payments and 5.9% interest, wouldn't the balance be growing? Or is there a difference in calculations?

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EarlNowak
June 25, 2009 8:09 PM
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@K-Bo: 5% payments and 5.9% APR, $25,000 compounded monthly would take 10 years and six months to pay off.

But to put that in perspective- after three years, payments would be around $250 a month, after five, $75 a month.

On the other hand, if the minimum payment was 2% and instead of just paying the minimum, you put a fixed $500 a month towards it, you would have it paid off in five years.

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floraposte
June 25, 2009 9:21 PM
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@EarlNowak: I swear, one of my motivations for not keeping a balance is that figuring the math on the financing makes my head swim.

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Hil-fish
June 25, 2009 7:40 PM
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@K-Bo: 5.9% is the annual rate, I believe, so the monthly would be 5.9%/12 = 0.491667%. So they're paying more than just the interest every month.

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K-Bo
June 25, 2009 8:02 PM
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@Hil-fish: Ok, I figured it had to be something like that, because if the percentages applied to the same time period, the debt would be growing by .9% every month.

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friendlynerd
June 25, 2009 6:48 PM
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@B:
5.9% fixed, you'd know if you read more than the headline.

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EdnaLegume
June 25, 2009 6:47 PM
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@B: it's 5.9% as noted in the story

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citking
June 25, 2009 6:46 PM
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Chase just recently sent me a letter stating that \"Due to recent legislation we are raising your APR from 9.9% to Prime + 9%.\" I called and declined the changes, so naturally my account is closed and I am paying back at the terms I had.

What bothers me though is:

1) I've never been late on a payment,

2) I carried over a balance monthly of around $11,000 (only CC with a balance & consolidated from other cards),

3) The legislation hasn't been enacted yet, and

4) I've been to New York city and seen the Chase buildings on every street corner. They're as ubiquitous as Starbucks, and they wonder why they aren't profitable.

The kicker was the letter they mailed me letting me know of the changes made. One of the last lines was \"We're sorry to see you leave us as a customer and hope you will consider us again in the future for your credit needs.\"

Chase can kiss it. My Credit Union CC and a new cashback card from Discover are all I need.

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9 replies
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3skr1mad0r
June 26, 2009 3:02 PM
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@citking: I made the mistake of trashing the mail from them. Since I auto pay online, I don't look at paper statements. One of those mailings was a rate hike which caused me to have a past due balance the next month. They wouldn't lower it back down once I called.
Luckily I was able to just take a loan out from my credit union and pay off the balance. Chase can bite it.

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dangermike
June 25, 2009 11:07 PM
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@citking: I had a Chase MAstercard that they closed for me about 4 or 5 months ago, which was closed 3 months after they raised my interest rates. Their justification was that since I hadn't used the card in 2 years, they clearly weren't meeting my needs and would close the account. It's not that my needs weren't met. My primary card, an american express, made it my card of choice. They pay 1-3% cash back with no annual fee unless you count my costco membership. The chase mastercard had a lower rate and a higher limit and had been open about a year longer. So actually, for a credit report line item and a backup card, my needs were perfectly met.

Anyway, upping the rate several months before they closed it was strike one. The arrogant and obnoxious, \"well clearly you're too good for us\" letter was strike two. But what *REALLY* pissed me and guaranteed that I will *NEVER* do business with Chase again was that on the very same day I received the cancellation letter, in an identical envelope upon identical stationery, I got another letter offering me their \"exclusive\" offer of a shiny new chase mastercard with the terms of the contract *almost* identical to my old card. The only change was a shiny new annual fee. Strike three. They're out.

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tyjon31
June 25, 2009 8:35 PM
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@citking: Folks, when you get letters like these especially with the bank telling you that part of the reason is the feds is to take make copies of the letter and send it to your congressman (or woman), both of your US Senators, The President and Chase corporate. It is outrageous that Chase appears to be retaliating against consumers by really passing the buck on them. We all must really advocate to members in Congress so whey see and hear the garbage that is going on with these financial institutions especially those that got a part of the almost $1 trillion dollars in bail out. I am not advocating that banks should not be paid back the debts they are owed but they have not right to throw you in a ditch and start burying you either

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Anonymous
June 25, 2009 8:33 PM
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@citking:

I have two accounts; what amazes me is they wanted to raise the interest on the account with the lowest balance but higher interest rate. The account I was putting more money in to get rid of the darn thing. I declined and will pay off it off at 7.99%.

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tbonekatz
June 25, 2009 7:14 PM
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@citking:
When Chase more doubled my interest rate the reason they gave was \"To maintain the profitability of your account.\" I declined and transferred the balance to another card. So intead of getting the 7.9% I was paying they got nothing.

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wcnghj
June 26, 2009 9:42 AM
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@tbonekatz: Why did you decline? You should never close a no balance card w/ no Annual Fee..

You could have just transferred and kept the card open.

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Craig Belson
June 25, 2009 9:59 PM
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@tbonekatz: Got nothing from him, you mean.

Balance transfers mean you don't pay off the balance to Chase (for example). It means that you transfer the balance to your brand new shiny CapitalOne card, and CO cuts Chase a check for your balance.

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tbonekatz
June 26, 2009 1:44 AM
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@Craig Belson: Of course the balance to Chase was paid by my shiny new card. But Chase didn't get to collect 7.9% interest on it for however long it would taken me to pay it off if they hadn't changed the terms.

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Tallanvor
June 25, 2009 7:07 PM
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@citking: They're doing it now because once the law goes into effect, they won't be able to raise the rates as quickly as they can now.

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Cant_stop_the_rock
June 25, 2009 8:06 PM
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@Tallanvor:
Correct. The law will restrict their ability to manage risk, so they're trying to preemptively manage risk.

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TouchMyMonkey
June 25, 2009 8:18 PM
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@Cant_stop_the_rock: The way to manage risk is to stop issuing cards to any schmuck who can fog a mirror.

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Rectilinear Propagation
June 25, 2009 6:48 PM
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I wonder if Greg and his wife were managing to make a dent in their debt despite their lower incomes. I know someone who, before they got rid of the card, got a higher minimum payment when they started paying the debt off.

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3 replies
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Skaperen
June 25, 2009 8:22 PM
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@Rectilinear Propagation: I'd love to see all the CC holders in America go on strike and not pay a penny until the CC companies agree to rates and terms that let people \"ride through\" the recession instead of trying to drive up bankruptcy. So this might drive up bank bankruptcies? Cry me a river!

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Skin Art Squared
June 25, 2009 8:31 PM
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@Skaperen: If you're willing to take the hit on your credit, that's a very easy way to do it. Takes about a year to get in motion, sometimes less, but at some point it's passed off to some collection agency, who you can continue to ignore until they agree to your terms. At this stage, there is no more interest or penalties being accrued. The balance is whatever the balance is. If you decide to pay them $50 a month forever, it's going toward pure principal. If you dangle a fairly good chunk of say, 50% or 60% in front of them, you may very well get a free ride on the rest. Of course, this method is not for the timid or mentally soft, and make no mistake, your credit will be trashed.

But if you're even contemplating bankruptcy, then it's time to sit down and regroup first. And credit card balances, unsecured credit, in that situation can suck it. They get paid LAST. (if at all)

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Tetrine
June 25, 2009 7:13 PM
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@Rectilinear Propagation: Happened to me on my Citi card... the more I pay off, the more they raise my minimum payment. And at this point I have been living CC-free for nearly 10 months just so I could get all my debt paid off more quickly. Pretty frustrating, the tatics they use!

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Jevia
June 25, 2009 6:51 PM
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You know, I'm tired of seeing people be criticized because they choose to buy something that they couldn't afford to pay for outright, so they financed it and accepted the fact that they would pay more back.


For all we know, this guy had to do some immediate home repairs and didn't have access to other funds. He accepted the fact that he'd have to pay it all back with interest at $558 a month. He budgeted for that, a budget that is now tighter with decreased income (which wasn't his fault). Now the credit card is changing the terms and demanding more. Why should he be demonized because he accepted the original terms and was being responsible in paying it back?


What is so wrong about financing a purchase if you agree to the original terms of the agreement? Not everyone has a spare $25,000 cash lying around when the plumbing suddenly needs to be replaced.

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4 replies
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ugadawg
June 25, 2009 7:10 PM
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@Jevia: He should be paying more than just the 'minimum' anyway. Anyone that pays the minimum will never get out of debt. I think that Chase did him a favor in this regard. He should open an Platinum card with a credit union and transfer the balance like yesterday. He needs to kick Chase to the curb.

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jayphat
June 25, 2009 10:06 PM
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@ugadawg:


The OP never said he was paying just the minimum. For all we know he was $100 over the minimum each time. Now the minimum is so high its out of reach for him.

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Hil-fish
June 25, 2009 7:44 PM
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@ugadawg: Not true - if he was paying the minimum, he was paying more than just the interest on the debt, which means he was slowly chipping away at the principal. I don't know how the minimum is typically calculated (I don't carry a balance on my credit cards, so I've never taken the time to figure it out), but in this case, the math implies that yeah, he was paying down the debt, albeit slowly.

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ugadawg
June 25, 2009 7:56 PM
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@Hil-fish: Ummm. Have you really read Consumerist? You NEVER pay just the minimum on a credit card and think you can pay down your balance. The credit card companies have an algorithm that they use to set your minimum payment. When you do make the minimum, most if not all the payment goes to interest. The principle budges very little if not at all. You should always make more than the minimum so that you aren't under water. The only good thing about making the minimum payment is to keep you from going over 30 days late and having late payments assessed to your account. It does nothing for your financial health in the long run. Plus you'll end up paying WAY more than what you originally owed. Bad idea.

[www.associatedcontent.com]

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Hil-fish
June 25, 2009 8:05 PM
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@ugadawg: Except that another poster commented that there is a law in place that makes it impossbile for the credit card companies to set the minimum in such a way that you end up with the principal *growing*. And in this case, if his APR is 5.9%, then his monthly interest is about 0.491667%, and he's paying 2% per month, so he's chipping away at the principal.

With ANY loan you take out, at the beginning of the payback period, almost all of your monthly payment is going to be going toward interest and not principal.

And that link you sent? It's talking about cases where you have much higher interest rates - like 14% or more. This guy's is 5.9%. That's a great rate.

If you can afford it, you should NEVER carry a balance on a credit card, and you should always pay off credit card debt as fast as you can. I agree with you on that. But this guy seems to be trying to do the right thing, and he WAS paying down the debt.

Math. It's not just for nerds anymore!

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Shadowfire
June 25, 2009 9:36 PM
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@Hil-fish: Further math. In the few years, they chipped away at least 6k in debt (started with over 25k. With a 930 monthly payment of 5%, you're looking at around 18.6k (plus any forthcoming interest). Or at least, that's the quick math I ran here...

Also, a lot of people are being assholes and chiding OP for having so much debt, forgetting that a lot of people are in debt because of house repairs, medical bills, and similar unavoidables.

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Josh Saint Jacque
June 25, 2009 9:19 PM
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@Hil-fish:
That monthly interest rate is incorrect, most credit cards are compounded monthly so his effective rate is actually 6.062%, which is .5052% per month.

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Devidence
June 25, 2009 6:54 PM
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@Jevia:

Yeah there are not enough details here to criticize his financial situation. I would argue that people should explore ALL other options before putting this much money on any credit card. Working out a loan on equity, etc. would be a much safer option. Credit card balances are always at risk, and promotional rates never last that long.

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kiltman
June 25, 2009 6:52 PM
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Got the same letter from Chase. Gonna suck it up, pay it off (3.99promo baby!) and go with a credit union.

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2 replies
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wcnghj
June 26, 2009 9:44 AM
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@kiltman: But keep the account open! You will make your utilization high!

www.creditboards.com FMI

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ckaught78
June 25, 2009 6:53 PM
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A number of years back Congress enacted legislation that forced credit card issuers to increase minimum payments to circumvent negative ammortization. For those of you that don't know what that is, negative ammortization happens when your accrued interest is larger than your minimum payment, meaning your balance increases each month and you will never pay off the card.


So many people complain to congress to fix their mistakes. Maybe one day we Americans will take a little responsibility for our own finances and not buy things on credit. If you can't pay for it in cash, don't buy it. Why should corporate america have to subsidize our irresponsibility?

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Jetgirly
June 26, 2009 12:03 AM
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@ckaught78: I am a first-year teacher. I make $56,595 a year, plus free very-extended health care (for example, I can be reimbursed for up to $500 each for just for massages). I started the year with $9000 in student loans remaining (minimum monthly payment is $90, I pay $250)- my only debt. However, I wanted to be cautious with money so I spent my entire first teaching year taking transit- an hour in each direction- to and from school. In May I was offered a continuous contract with the school board, basically meaning employment for life unless I do something insane/illegal. I received a salary guarantee for next year, and will now be earning $62,500 (through a combination of cost of living allowances and rising one year on the experience scale). When I got that job security, I bought my first car- a new car. It's a car that I love and it has a few little extras that make me happy (moonroof, A/C, etc.). I put $3500 down, out of the $5000 I'd saved (for personal use, seperate from retirement savings) since my first paycheque in September. I will have car payments of $340 for the next five years, in addition to $200 or so for insurance each month because I've never had a car before (this year and next year I have been / will be able to pay this in one lump sum from my tax return). The interest rate on the car loan is 1.9%. It would take me a couple of years to save up enough money to pay cash for the car. That's a couple more years of commuting two hours each day and spending $90 a month on a transit pass. That commute sucked for my mental health and it also took away some of the energy that I now put towards my students, friends and family. I am still saving at least 10% of my monthly income for things like travel and 10% of my monthly income for retirement (I'm only twenty-five). At the end of every month I put any leftover money into my \"down payment on a house someday\" fund. Don't tell me that going into debt was a poor choice. I'm responsible, I waited until I had super-secure employment, and I didn't have to decrease my saving. I cut my commute by 75% and also now have access to money-saving things that I couldn't reach by transit before.

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gravitus
June 25, 2009 10:02 PM
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@ckaught78:

I'll be sure to let my son know that it is his fault my company sponsored health insurance plan didn't adequately address his medical needs and bills. I have a Chase card that I transferred my MEDICAL BILLS too as it had a fixed rate and would allow me to keep my family in our home while still PAYING MY BILL. I got the exact same letter from Chase on Tuesday evening.

/sigh

Die in a fire you ignorant shitbird.

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CU-Tim
June 29, 2009 10:49 PM
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@gravitus: if you'd like we are collecting a data base of stories of what credit cards are doing post CARD Act to screw people over. It would be great if you entered yours.
[secure.consumersunion.org]

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Jennifer Morris
June 25, 2009 9:24 PM
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@ckaught78: I worked in collections for Chase's CC division a few years ago. I remember talking to a young guy who said he didn't care about his credit because he was only going to buy things with cash from now on. I asked about buying a house and he insisted that he'd only buy one if he had the full amount in cash. I remember him because it was such a ridiculous thing for someone to say. \"Cash only\" just isn't an option and anyone who believes it is is incredibly naive (ckaught78, I'm looking at you)

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say what?!
June 26, 2009 2:13 AM
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@Jennifer Morris: while, i'm inclined to agree with you, it's quite forward to say \"cash only\" isn't an option. My mother and a few of my friends' parents purchased their houses with cash money. It's not impossible, it's just not that likely here in the USA.

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blueneon
June 25, 2009 10:52 PM
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@Jennifer Morris:

People who follow Dave Ramsey's plan may beg to differ with your assertion that paying a house in cash is \"ridiculous\" and \"naive\".

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JiminyChristmas
June 25, 2009 9:05 PM
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@ckaught78: This isn't correct. Congress did pass legislation that increased minimum payments. The reason they did it was because the credit card companies set minimum payments so low that it would take decades to pay off the balance by making only the minimum payment. Minimums were often set so low that they paid off only a fraction of 1% of the principal each month.


I don't know where you got the negative amortization idea. Maybe from reading about subprime mortgages? I've never heard of a credit card minimum payment set lower than each month's accrued interest and fees. The only way to have a negatively amortizing credit card debt would be to go into prolonged default where unpaid interest and fees are added to the principal and you then pay interest on the interest.

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Duke_Newcombe sez íViva la Revolucion de Chihuahua!
June 25, 2009 8:05 PM
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@ckaught78: Curious question: Although this being the interwebs and what not, I could never test the veracity of your answer, but, did you purchase your house/condo/hovel with credit, or cash.

If it's credit, do you see how hypocritical the statement you made is?

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e.varden
June 25, 2009 7:29 PM
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@ckaught78:


H'mm. (Thoughty) Yes you come across as a smug arrogant right-wing um, person.


The North American economy is built on suckering in not only the able, but those who have no resources nor smarts to extricate themselves from the seduction.


You might say \"why, they're just stoopid!\" And you'd be right.


Like teasing a Downs Syndrome lad into a double-sized ice cream cone at 4x the price, \"because look at how bigger it is!\"


This is appalling.


We are all gullible at one time or another. Exploitation of our inability to filter out fraud does not mean fraud is OK.


Get it?

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joepa1
June 26, 2009 12:06 AM
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@e.varden: @e.varden: Fraud?? How is selling stupid folks product fraud?


Your comments are ridiculous!

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rdm
June 25, 2009 6:59 PM
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As far as credit counseling goes I highly recommend CCCS who I used to pay off like $40k in CC debt over about 3.5 years (without any real change in lifestyle except not using the cards anymore).

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JohnQPublic
June 25, 2009 8:38 PM
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@rdm: I know that CCCS charges a monthly fee for their services, somewhere in the range of $25-$50 I think. They also \"recommend\" giving them one month's payments as a gratuity at the end of the program. I'm not sure how good those terms are, but it seems to work for someone I know.

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wrjohnston91283
June 25, 2009 7:07 PM
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The numbers don't make sense:

$558 is 2% of $27,900, while $930 is 5% of 18,600.

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DefineStatutory
June 25, 2009 7:19 PM
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@wrjohnston91283:


I read it that going from 2 to 5% increased the payment by $558. That means 558 is 3% of the balance. (the difference between 2 and 5%)


That means the balance is 18,600. I'm assuming that they transferred over 25k a \"few years ago\" and have been paying it down.


And at a fixed 5.9% interest, this isn't necessarily \"bad\" debt. If they consolidated debt that was elsewhere at 8 or 10 or heaven forbid 19% interest, and lumped it all together at a fixed 5.9%, it wasn't a bad financial move. It was actualy quite smart. Lets cut the guy some slack, mmkay?


Maybe this consolidation of debt was step 1 for them in getting out of debt and changing their spending habits.

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wrjohnston91283
June 26, 2009 12:16 PM
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@DefineStatutory:


Oh - yup, I didnt' read it properly. The math makes sense now.

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coren
June 25, 2009 7:46 PM
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@DefineStatutory: I was about to post the same thing, having been fuzzy on the numbers myself, so thanks for clearing it up!

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Anonymous
June 25, 2009 7:10 PM
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While I think that Chase should stick to the original terms that they laid out for the OP, one of the strategies CC companies have been using to keep people in permanent debt is to lower the minimum payment from 5% to 2%. Since many people pay the minimum every month, this move means it takes that much longer to pay off the loan.

This was all explained in the Frontline episode a few years back, The Secret History of the Credit Card:

http://www.pbs.org/wgbh/pages/frontline/shows/credit/

It's really a sleezy thing they did to entrap people.

Again, the OP opened this line of credit with the understanding that the minimum payment would be 2% and thus, affordable to him. Chase should stick to the original terms of this loan. But on a large scale, if credit card minimums trend back to 5% instead of 2%, consumers as a whole will probably be much better off.

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henrygates
June 25, 2009 7:11 PM
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The OP needs to head to a bank or credit union and secure a personal loan. Putting $25k on a credit card when you're not going to pay it off at the end of the month is a bad idea. Even with a good balance transfer rate, any slip-up and everything goes into the default rate.

Credit cards are not long term loan vehicles. I'd also be interested in seeing what the other terms of the transfer are, and what the OP's long term strategy is.

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JiminyChristmas
June 25, 2009 9:21 PM
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@henrygates: Yeah, that might work. As others have said, 5.9% fixed is a very good rate for unsecured debt. Current averages for personal loans are closer to 12%. I suppose if the OP's sole concern is getting a lower monthly payment he would have some success if the repayment period for the personal loan were three years or more. He would end up paying a couple thousand more in interest, but it would solve his immediate problem. I think the hardest part would be qualifying for the loan.

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mac-phisto
June 25, 2009 8:30 PM
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@henrygates: that's a good idea, but it may be a wild goose chase. many banks have gotten away from offering unsecured loans (by replacing them with credit cards) & even banks/cus that offer them max out at pretty low amounts. both my credit unions top out their signatures at ~$10k. above that, they want some sort of security.

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humphrmi
June 25, 2009 7:37 PM
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@henrygates: Agreed, he should get a regular sig loan which is usually fixed rate & payment with a pay-off date. Then he's actually getting out of debt, with a payment he can afford.

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Anonymous
June 25, 2009 7:35 PM
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@Devidence: @henrygates: This is actually a repeat of a move Chase did a few months ago where they raised the minimum payment and tacked on an extra 10.00 per month \"service charge\" to accounts that had a low rate fixed \"for life of balance\" offer attached. If the balance on said special promo account was older than 2 years, you got the shaft. After a class action suit was filed, the service charges were reversed but the minimum payment change remained in effect. The first scam did allow the cardholder the option of \"opting out\" by closing the card and paying under the old terms or accepting a higher variable rate in exchange for keeping the same minimum payment percentage. Folks who used the \"life of balance\" low fixed rate offers were likely using it to consolidate and pay off debt because it was a smart money move. That was then, this is now. I had 4 credit cards with them, 2 w/that particular promo. I paid them off and moved on. I no longer Chase what matters.

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Corporate_guy
June 25, 2009 7:17 PM
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@henrygates: 5.9% fixed is not a bad idea. That is actually a really good rate. Yes it's risky if you miss a payment. But don't miss a payment.

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sponica
June 25, 2009 7:52 PM
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@Corporate_guy: i'd kill to have 5.9% on my student loans. my direct loans are fixed at 6.8, my stafford loans are variable and right now they are 3.75. my perkins is fixed at 5. the sallie mae and citibank personal loans change with the tides...right now they are reasonable, but I so don't want interest rates to sky rocket in the next few years.

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Corporate_guy
June 25, 2009 7:59 PM
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@sponica: My loans are the same. And those variable rates are about to get cheaper on the 1st of july. After that you could consolidate if you wanted to lock in that low rate.

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TCama
June 25, 2009 7:11 PM
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Wait, I thought you always had the opportunity to opt out if any terms of the cardholder agreement are changed. And I thought that was the law.

Someone enlighten me?

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Corporate_guy
June 25, 2009 7:13 PM
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So they are making you pay off the debt faster? This is a good thing. You should be happy they didn't just jack up the interest rate and leave you with a balance that would never decrease. Making you pay your balance off at a reasonable rate is a good thing.

[www.dinkytown.net]
It would take 26 years and two months to pay off 25k at 2% minimum. At 5% it would take 10 years 5 months.

It's very hard to call chase wrong here.

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CoarseLive
June 26, 2009 3:37 AM
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@Crprt_gy: T mny ppl n hr r frggn' rtrdd. Srsly! N sht h'd hv t py t ff mr qckly. Th cmplnt sn't tht h's bng frcd t py t mr qckly. Th cmplnt s tht dng s wll dvstt hs bdgt. Wht gd s th rpd pymnt f h gs bnkrpt?

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ludwigk
June 25, 2009 8:02 PM
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@CoarseLive: This is a classic dilemma for people carrying a large amount of debt that is accruing interest.

At 2% interest, they end up paying an additional $8061 in interest alone. At 5%, its $2715.

So, maybe they can't pay 5%. that's perfectly valid. But if they could, they would be pocketing another $5300 and change over the course of 10 years, which is significant.

Judging from the payments, it looks like their outstanding balance is $18,600, as opposed to $25k, but the potential for big savings is still there.

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K-Bo
June 25, 2009 11:06 PM
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@Corporate_guy: While I agree that the shorter pay off plan is a good idea if they swing it, what makes you think Chase has their best interest at heart in this, or that it's even Chase's right to choose that this couple should be debt free sooner (not to mention, sooner this couple is debt free, the less money for Chase)

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Saboth
June 25, 2009 7:17 PM
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@Corporate_guy:

I find it pretty easy to call them in the wrong for changing the basis of the agreement. This is the reason we have congress cracking down on credit cards now. You can't borrow money from them then have then continuously change the terms of the contract on the fly, with no explanation or reasoning.

So 2% is too low, and you think 5% is too low...why not 10%...15%...20%? He'd pay it off really really fast then. Oh...he doesn't have an extra $3,000 a month....guess he should have thought of that years ago when he agreed to 2%!

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SkokieGuy
June 25, 2009 7:25 PM
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@Saboth: How about get a great deal on a new car? $2,500 cash back + 0% financing for 60 months. Your payment is only $245.00 a month.


Six months after you purchase the car, you receive a notice that the interest rate will not be 14.9% and the loan must be paid back in 3 years?


Credit cards are one of the few contracts to extend credit where terms can be changed at the credit-grantor's whim.


Imaging your car, your house, your student loan, etc. all being subject to random modifications for any reason at any time. Good times, huh?

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Corporate_guy
June 25, 2009 8:02 PM
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@SkokieGuy: My students loans are variable and on the 1st they are about to get a random modification where the interest rate goes down.

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SkokieGuy
June 25, 2009 8:37 PM
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@Corporate_guy: And that is NOT a change in terms. The variable rate was known to you, including when it would potentially change, and what index it was tied to.


The OP had a fixed promotional rate that was changed.


To be a fair comparison, let's say you took out student loans with a variable prime + 2.5% interest rate that will adjust bi-annually.


A year or two later, you get a letter that your rate is now prime + 6% and it adjusts monthly.


Fair?

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Saboth
June 25, 2009 8:56 PM
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@SkokieGuy:

I think part of the problem is we agree to say, 10% interest on a credit card, and we understand it is linked to the prime rate and all that. Then you get a letter stating your rate is 25%, due to \"market conditions\". Oh geeze, did the prime rate triple? No....

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camman68
June 25, 2009 7:22 PM
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@Saboth: Why is it hard to call Chase wrong here? They made an offer, then and agreement which was accepted. Now they don't want to honor their initial agreement?

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vladthepaler
June 25, 2009 7:18 PM
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You should thank Chase for raising your minimum payment; it means you'll pay less interest in the long run. Also, a higher minimum payment might discourage people from spending more than they can really afford to, which will in turn mean fewer cases of default/bankrupcy. A higher minimum payment is a rare example of a win for both the credit card company and the consumer.

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ajresch
June 25, 2009 8:02 PM
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@vladthepaler: Besides Hil-fish's point, how would raising the minimum payment part-way through be a win for both?


It would be a loss for Chase, if anything.


Scenario 1. The customer can't pay, and defaults. Chase can't collect the money.


Scenario 2. The customer can afford to pay the extra, and pays off the credit card early. The company loses all the extra interest they could have earned.

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MentallyRetired
June 25, 2009 9:23 PM
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@ajresch: Under scenario 1, maybe Chase collects all the money anyway through something like a credit default swap.

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Hil-fish
June 25, 2009 7:52 PM
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@vladthepaler: Are you being deliberately mean, or are you just clueless?

He spent the money - we don't know what he spent it on. Medical bills? A Corvette? Home repairs? Whatever. He spent it. He can afford to pay 2% per month to pay it down. He CANNOT afford to pay 5% per month to pay it down. But Chase is forcing him to.

He's paying down his debt, he's trying to do right, and Chase is punishing him. That stinks. Less interest IN THE LONG RUN is only a good thing if it DOESN'T mean you go into bankruptcy RIGHT NOW.

Yeesh.

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Samantha Brown
June 25, 2009 7:37 PM
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Am I the only one who sees the \"total card balance\" as the \"amount due\"? I can't ever imagine just paying the minimum amount - I basically pretend it doesn't exist.

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littlemisslondon
June 26, 2009 1:14 PM
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@Samantha Brown: Granted, I'm Canadian and therefore don't have the worry about emergency medical bills. But I don't carry a balance either. CCs have just about the highest interest rates of any debt; on the rare occasion I haven't been able to pay off the card completely, like when my cat got sick and I had a super-high vet bill, I draw from my line of credit and therefore have debt sitting for a month or two at 5% rather than 19% interest. Doesn't it make the most sense to pay the debt with the most interest FIRST?

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Anonymous
June 25, 2009 8:51 PM
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@Samantha Brown: @Samantha Brown: I am the same way, at least for the time being. However, I've been thinking more and more about the increasing likelihood that I will lose my job and not be able to find one quickly. I know that I have some expensive medical procedures and probably car repairs in my immediate future. While I am doing my best to save up so that I have an emergency fund, I know that if I am out of work for an extended period of time, I will have to rely on my credit cards to keep me afloat.The sick thing is that the one thing I am dreading most of all is that first credit card bill that I can't pay off in full. Actually, just thinking about it is making me turn green ... the thought of debt terrifies me. I'm young enough and lucky enough (and responsible enough) that I've never had any real financial trouble, but I have a feeling this days are coming to an end.

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chocobo
June 25, 2009 7:49 PM
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@Samantha Brown: Nope... I'm the same way. I just can't imagine thinking the same way that the majority of Americans seem to- \"I wish I could afford all this stuff... oh what the heck, I'll just take it all now, and hope that I can eventually pay for it.\"

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floraposte
June 25, 2009 9:27 PM
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@chocobo: I don't run a balance either, but I don't find it particularly hard to understand why people would have to. One \"sorry, the anesthetist was out of network\" and you're $15,000 in the hole.

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ShikhaCadimillac
June 25, 2009 7:45 PM
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When I login to my Chase credit card account and click on the little ? next to my minimum balance due amount, this is what it says at the bottom...

\"While this new minimum payment requirement will help many consumers pay down their credit card balances, we recognize that higher minimum payments may create a hardship for some people. If this change creates a hardship for you, we have several options available to assist you. Please call the toll-free number on the back of your card and an advisor will be happy to answer your questions and explain options to address your specific situation.\"

Maybe he should do exactly what it says there, call an advisor and discuss the several options available with them.

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Anonymous
June 25, 2009 7:50 PM
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I am in a situation where I consolidated credit card to the lower interest rate and pay at least the minimum and most of the time I pay extra to get the balance down. Recently I lost my job and have had to pay this minimum payment. Doing what I can to not destroy my credit .Having to pay more than double a payment means no food or even worse, claimig bankruptcy may be something that will have to be dealt with. This was not my intent when I started to do what i could to consolidate and rid myself of the debt. The economy and loss of a job has put me in a place I have never been before.Do not judge people in this situation, We do what we can to get by in today's economy. You have a job and you life situations have not cause the need for debt.BM from Dracut

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Bahnburner
June 25, 2009 7:52 PM
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Blaming Chase for protecting its interest is like blaming the cops when you get pulled over for drunk driving.

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IfThenElvis
June 25, 2009 8:03 PM
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@Bahnburner:
\"Blaming Chase for protecting its interest is like blaming the cops when you get pulled over for drunk driving.\"

No, it's like the cop pulling you over and telling you that that he just changed the drunk driving definition from .08 BAC to having blue eyes.

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jimconsumer
June 25, 2009 8:34 PM
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@IfThenElvis: Exactly. I think the guy is a moron for carrying a $25k credit card balance, but he had an agreement with Chase in advance. They broke that agreement and changed the terms on him. That is bullshit.

If I were him, I wouldn't go to credit counseling, I'd just QUIT PAYING THEM. 100%, stop paying, walk away. Throw their bills away every month, then put the money you would have been paying them into savings. After a year of this, take that lump sum of cash, call them up and offer a cash settlement. They'll settle for pennies on the dollar. Yeah, you'll destroy your credit, but that's fine - it will probably be the best thing that ever happened to you, as it will force you to live on your own income and quit borrowing.

I know people will get mad at me for suggesting he not repay the money he spent, but why should he? Chase willy-nilly changed the terms of his loan. As far as I'm concerned he has no further obligation to play nice with them. Screw 'em. Let the account default, then settle with them a year or two from now, and NEVER BORROW MONEY AGAIN from these sharks. Shred your cards and start living on less than you make.

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TheFuzz53
June 25, 2009 7:53 PM
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No, congress is trying to prevent people from accumulating credit card debt in the first place. I'm sorry, but I have no sympathy for people that put themselves in that position.

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pal003
June 26, 2009 2:21 PM
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@TheFuzz53:

Chase, Chase, Chase.

Jamie Dimon \"When I hear the constant vilification of corporate America, I personally don't understand it\"

\"Chase mortgage memo pushes 'Cheats & Tricks'\"
[www.oregonlive.com]

So for all of you criticizing Greg - it was A-OK for Chase to Manipulate their Mortgage Approval software - to Approve Loans that Should NEVER Have Been Approved - sounds like Fraudulent Loan Approval to me.

And then get a Taxpayer Paid Bailout so they can stay win business.

But You All think Chase is just peachy - doing business as usual - and screw the customer. Nice.

Seriously, We All would have done better if we just let All of the Arrogant Big Banksters - Go Bankrupt!!

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Hobz
June 25, 2009 7:54 PM
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I find it funny that so many are saying you should thank Chase for increasing his minimum payment. I do agree that paying off a credit card sooner is a good thing. But perhaps the OP isn't in the right financial state to do that? So effectively Chase has just backed him into a corner.

Here's something I was wondering. When he applied for the credit, Chase most likely looked at his credit rating and perhaps even his debt to income ratio? Given the fact that his income has decreased does it make sense to increase his monthly out of pocket knowing that he may not be able to pay? I mean realistically, wouldn't Chase more or less have to take this into consideration? Most likely he had a budget in mind or knew what he could pay each month when he took out the credit and now Chase has put him over budget.

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tz
June 25, 2009 8:05 PM
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You and 400,000 or more others:

[www.consumeraffairs.com]

And check your January and Feburary statments or the $10/mo fee, you might be interested in

[www.gslawny.com]

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docrice
June 25, 2009 8:08 PM
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This same exact circumstance just happened to a guy I work with. Even better, Chase didn't include any \"opt out\" option or details on contacting them about this. Sounds like they're hurting a lot of people with this.

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Skin Art Squared
June 25, 2009 8:14 PM
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I say, stop paying them altogether. Then in 8 months answer one of their calls and ask them how that unsecured debt is working out for them.

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TVGenius
June 25, 2009 8:21 PM
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If 5% of your balance is over $1,000, then I have no sympathy.

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BreadBoy
June 25, 2009 8:22 PM
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WOW! At 2% it would have taken forever to pay off the balance; at 5% they are at greater risk of bankrupcy. I agree the OP should seek out credit/debit counseling.

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jimconsumer
June 25, 2009 8:44 PM
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Quit paying the bill. Let the account go into default and spend the next year or two making your payments to your own savings account. Ignore their screams and change your phone number if you have to. Let them yell and threaten - they won't do crap for at least a year, probably 2 or 3.

Once you have ten grand cash saved up, call the loan sharks up and offer a cash settlement. They'll settle for pennies on the dollar. Yes, you will trash your credit, but that's good for you: You don't need to be borrowing more money, anyway.

Yes, I am advocating he not repay the debt that he legitimately owes. I am advocating this because Chase is not playing by the rules. He had a deal with them and they broke it. They changed the terms willy-nilly. He is no longer obligated to play nice with them at this point. Normally, I would never advocate something like this, but when they start jerking you around and breaking their agreement with you, honestly - screw them. Why should you feel obligated to honor the terms of the loan agreement when they've shown they don't give a damn what the agreement says, they're going to do what they like, anyway?

People quit paying their bills ALL THE TIME. Get over the stigma and get the jerks back for their stupidity. You'll just be one of millions who are doing the same thing. Whatever you do, DO NOT let your family go hungry or let your mortgage get into default, or let your lights and water get turned off, trying to make the payments to these sharks. Prioritize: Off the top of the check you pay for necessities only - food, utility bills, mortgage/rent, gas, insurance, etc. The credit card companies are LAST on your list. If you don't have the money to pay them, don't, and don't let them bully you about it. Remember, THEY changed the terms of the agreement and blindsided you with this. It's their own damn fault if you can't afford to pay them.

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NeverLetMeDown
June 26, 2009 11:49 AM
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@jimconsumer:


Great idea, assuming you don't want to (a) move (into a an owned or rented home) or (b) get a new job for the next seven years.

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ugadawg
June 25, 2009 9:40 PM
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@jimconsumer: Methinks you still live with your mother given that recommendation.

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Tzepish
June 25, 2009 9:02 PM
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@Joshua Willis: Yes, people have to pay off their debts. And now, thanks to the Chase rate increase, the OP will no longer be able to.

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IfThenElvis
June 25, 2009 9:10 PM
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There is going to be a lot more of this. The new rules regulating credit card rates doesn't kick in until next year - so the CC companies are racing to lock you in at higher rates before the new law comes into effect. There never should nave been such long lag time from legislation to to implemenation.

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GiselleBeardchen
June 25, 2009 9:38 PM
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Gotta say---I'm really disappointed in the Consumerist's take on this. Not sure anyone at the Consumerist really understands the issue here. Those affected here are mainstream responsible credit worthy, not living above thier means citizens, who are victims of Chase \"bait and switch\" illegal tactics. chase offerred them really good terms to Consolodate their debt or use their services at low rates to fix up homes etc. Chase made sure to advertise the low rate (be it 1.9 or 4.9) as being for the life of the balance! --Without , of course advertising the fact that they can raise the minimum payment 4X with no notice.

Anyway----Until The Consumerist has the ability to fully understand a major issue when it hits them in the gut------you're not my advocate!

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Anonymous
June 26, 2009 4:18 AM
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@GiselleBeardchen:

Chase while not the wisest move in my
opinion has not broke any of their terms on these balance
transfer offers.I took one myself and in the same boat.
People need to read their user agreements. I took
the time to read these when I first got the cards and
they spell out everything in there. They hold all the cards
and can change the terms at any time including your apr,
minimum payment ,credit line,and demand immediate payment of your balance in full need be.
They have kept their word by keeping the APR at the set rate but I don't beleive any mention of a set minimum payment was mentioned but I don't have the terms of
the transfer balance. So as unfortunate as it is they are
within there rights to raise the minimum payment which
if anyone remembers was set forth by congress a few
years ago. The $10 fee instituted on earlier account was
a break in terms and was stopped.
I keep reading statements form people really mad about
these companies raising their interest rates,fees, saying they
have no business .Please people read your terms! I
have only used my card out of necessity usually and always
cringed to have to because I know they can and will
screw you eventually so everone needs to pay
off your cards as soon as possible. I used my balance tranfer
to pay my high medical deductible . I am not sure why
chase didn't figure people would use these low
interest life of the balance deals as long term
loans is beyond me . They are great
rates and I appreciate chase offering them to me and
have saved me alot in interest. Unfortunately when things seem to good to be true they usually are. I always knew
they would try something to get out of these low rate
loans eventually.Where do you find 2.99% long term unsecured loans ?

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Chris Walters
June 26, 2009 12:36 AM
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@GiselleBeardchen: We have scores of posts about the anti-consumer practices of credit card companies. This post is focused on what to do after we all agree that they're jerks--it's about dealing on a practical level with the overwhelming burden that one of those practices has created.

As floraposte points out, there's no judgment in the post. The simple truth is that credit card companies can change the terms, and they're doing it left and right these days. The post is about one potential solution for customers who suddenly find themselves in a very precarious position.

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floraposte
June 25, 2009 11:19 PM
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@GiselleBeardchen: I'm not seeing anything that disagrees with your characterization in the Consumerist's article. The only disagreement I can see is in the comments, which the blog doesn't write.

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GiselleBeardchen
June 25, 2009 9:40 PM
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You want the real story---look at:

[www.consumeraffairs.com]

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H3ion
June 25, 2009 9:40 PM
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Some interesting numbers from an MSNBC article, here

[www.msnbc.msn.com]

The interest cost over a 3-5 year period is incredible. If the OP can't afford $1,000 but can get Chase to take some lesser amount, say $800, the interest savings would be enough to buy a car.

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TCinIowa
June 25, 2009 9:48 PM
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It perfectly OK to blame Chase.


They're trying to avoid the consequences of bad decisions they made. Not necessarily with this particular card holder, but with all the others.


It's not fair to change the terms out from under someone who was (presumably) keeping up their end of the bargain.


Chase, and all of Chase's shareholders should have to eat it. New terms should only go for new customers going forward. Chase can't say \"Yea, um, your know our accountants and actuaries? Turns out they're retards. So we're going to have to punish you the cardholder for that.\"


If cardholders have to pay for their screw-ups, the bank should too.

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lasbrisas
June 25, 2009 10:06 PM
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These poor folks have every right to borrow money with the reasonable expectation that both parties will live up to their end of the loan agreement.


Sounds like the borrower lived up to their end and the lender reneged on the agreement by changing the rules in the middle of the game.


That is simply not fair.


All of you who say that the borrower shouldn't have allowed himself to get into this situation are ignorant assholes.


Chase is wrong. He should have the right as another poster did to reject the new terms, cancel the card, and repay the loan under the old terms.


Good luck to you.

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watson2001
June 25, 2009 11:08 PM
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This is a creative way for Chase to get off their books the people who have balances with low interest rates. They hate these type of loans and Chase would like nothing better than to get rid of these people.


If they don't want you as a customer, pay 'em back and say the hell with it. It may suck having to eat rice and beans for a year or two, but once you are done, you can give chase the big kiss off.

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Anonymous
June 26, 2009 1:52 AM
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Well, it should not matter why this person has the debt. Yes, we are all advocates of being debt free but that is no reason to flame him.

He had a loan with a fixed interest rate and was paying it off. Per my calculations of $558 per month at 5.99% he would have it paid off in under 5 years. The real problem is not the debt itself, it is Chase changing the terms on the loan. Yes, it would be great if he had the extra money laying around but that is not the case.

Advice:
You should contact Chase and try to opt out of the payment change. If this is not an option, try to discuss an alternate payment option. Or if possible, try to secure financing from another source.

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wcnghj
June 26, 2009 2:26 AM
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OPTOUT, call and say you don't accept the changes ASAP!!

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Joshua Willis
June 26, 2009 2:55 AM
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MG, y mn ppl ctlly hv t py ff thr dbts?! Th hrrr. Hw bt nxt tm y dn't spnd mny tht y dn't hv nd thn prcd t pss nd mn whn th lndr wnts t b rpd.

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YouDidWhatNow?
June 26, 2009 3:41 PM
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@Joshua Willis:


WTF are you saying in the first place? Anybody posting on an internet forum with that kind of crap should be punched in the face.

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Datacloud
June 26, 2009 3:33 AM
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@Joshua Willis: Wow, a lot of replies here. I simply ignored the post when I saw the annoying \"no vowel\" format that hasn't been original or mildly amusing since 2002.

But he sounds like a moron so thanks for the favor.

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gravitus
June 25, 2009 10:06 PM
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@Joshua Willis: I am restated my response to another post in this thread.

I'll be sure to let my son know that it is his fault my company sponsored health insurance plan didn't adequately address his medical needs and bills. I have a Chase card that I transferred my MEDICAL BILLS too as it had a fixed rate and would allow me to keep my family in our home while still PAYING MY BILL. I got the exact same letter from Chase on Tuesday evening.

/sigh

Die in a fire you ignorant shitbird.

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floraposte
June 25, 2009 10:25 PM
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@gravitus: Because I teeter on the edge of this and would like to know--did the health care provider offer you any kind of payment plan, and was it at all viable? I know experiences are all over the map with this, with some giving terms preferable to a credit card's, but then some...not so much.

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gravitus
June 25, 2009 10:39 PM
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@floraposte: yea not so much. The problem compounds when you get billed by everyone in the hospital that even looks in your general direction. Many don't extend plans that cover payback for anything over 12 months of payments. That was just my situation with said billing company for said hospital.

As an example:
Son needed full blood and urine workups.
Got a bill from center where said procedures took place.
Got a bill from person who did the initial blood draws.
Got a bill from labs that performed all of the tests.
Got a bill from person who analyzed said tests.
Got a bill from doctor who talked the tests over with me.

All of this was after my family had reached the yearly limits of our policy.

I understand debt sucks and am not in favor of helping people out who bought 1 too many plasma T.V.'s but those who are on the \"piss on CC users\" lump the whole group of CC users into one big pile and then commence to hurdle insults about our ignorance.

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floraposte
June 25, 2009 11:32 PM
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@gravitus: A twelve-month limit? Wow, that's really horrible. I hope you can find some way of staving the crunch off (and I hope your son is doing better now).

My insurance claims to have an out of pocket annual limit, but (as is small-print footnoted in the paper brochure and not mentioned at all online) that's an out of pocket limit on their determination of usual and customary, not a total out of pocket limit. So I can get hit pretty hard well before I exceed coverage. But crossed fingers are always protective against disaster, right?

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Josh Saint Jacque
June 25, 2009 9:10 PM
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@Joshua Willis:

You guys need to get a grip!

It would be one thing if we were talking about unilateral increase in interest rate, but the fact that the story is about a person who's been making minimum 2% payments on a credit card with an enormous balance for years should give you some perspective. There is no reason, none what so ever, to have $25,000 in credit card debt, especially not when these people have two incomes.

I'm not saying these people are bad people, they just made a serious mistake and compounded it by not making every effort, cutting back their lifestyle, to get out of the debt. And I say that as someone who's made credit mistakes in the past.

The moral of this story is not that credit card companies are evil, it's that debt is evil and you should avoid it at all costs. Make a budget, live BELOW your means, save and then enjoy the lifestyle that is being beholden to NO ONE.

And to the posters about me I'd like to say that you are disgraces to this website that you would call the OP filthy slanders simply because you don't like his opinion. You need to grow up and learn to make a point without being so easily offended.

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Tzepish
June 26, 2009 3:53 PM
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@Josh Saint Jacque: \"There is no reason, none what so ever, to have $25,000 in credit card debt, especially not when these people have two incomes.

I'm not saying these people are bad people, they just made a serious mistake and compounded it by not making every effort, cutting back their lifestyle, to get out of the debt.\"

A mistake like, say, breaking his leg? Or getting cancer?

I currently have no credit card debt and quite a comfortable savings, I'm extraordinarily smart with my money, but I could easily be in the same boat by tomorrow if I get hit by a car today.

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Landru
June 26, 2009 2:58 AM
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@Josh Saint Jacque: He played by the rules and they changed the rules.

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Skaperen
June 25, 2009 8:15 PM
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@Joshua Willis: Yes they have to pay off their debts. But now with this stupidity, many of them simply won't be able to because the rate exceeds their ability. Madness! Madness!

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LadySiren is murdering her kids with HFCS and processed cheese
June 25, 2009 8:43 PM
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@Skaperen: For you trolls that are suggesting that the OP was somehow being irresponsible and never intended to repay Chase, go back and re-read the story. He notes right up front that he took a balance transfer...could it have been that he was trying to do the right thing and pay down his debts?

The way I read it was that he transferred balances onto a single card that had a good interest rate. People usually do this when they want to consolidate and pay down, no?

And yeah, Rectilinear Propagation wins at teh Intarwebs.

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TouchMyMonkey
June 25, 2009 8:01 PM
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@Joshua Willis: @YOXIM: My last new car came with a 48 month note for $18,000. My monthly payments were $430/mo. So your $500/mo. figure sounds just about right. No more credit card debt in four years. Nice.

Chase is just trying to push people over the edge on purpose so they can jack up their APR. Anyone who would dare defend such behavior is a troll.

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IfThenElvis
June 25, 2009 7:58 PM
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@Joshua Willis:
The OP has no problem with paying back the loan and hasn't missed a payment - but the lender has changed the repayment schedule and the OP must now repay at $1000 minimum per month - not the $500 as originally agreed.

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WraithSama
June 25, 2009 7:55 PM
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@Joshua Willis:
Another enlightened comment from a sagacious Facebook user.

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coan_net
June 25, 2009 7:35 PM
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@Joshua Willis: Well I took it as they are not complaining about having to repay their debt, it sounds like they want to.

They are complaining about how the monthly payment has doubled making it very hard.... and looks like Chase is TRYING to make them default or not pay the debt.

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squinko
June 25, 2009 7:31 PM
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@Rectilinear Propagation: This is excellent. You get a red heart, since you already have a gold star. :)

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cete-of-badgers
June 25, 2009 7:24 PM
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@Joshua Willis: You know nothing about the OP's situation. He may have had a medical emergency or needed the money to pay for college. You think everyone has $25,000 lying around? The answer is, \"No, so don't be such a jag.\"

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CoarseLive
June 25, 2009 7:19 PM
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@Joshua Willis: You suck.

What an easy thing to say, and to come up with with absolutely no consideration for the circumstances.

I vote that you suck as a person. Try again.

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emkiku
June 25, 2009 7:02 PM
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@Joshua Willis: I got the same notice (no opt out ability). Fortunately, my balance was low enough (I wasn't \"spending money I didn't have - it was a cash flow management tool) that I went ahead and paid it off. I knew when I signed up that interest rates could rise, etc. if I didn't make timely payments. Like Josh, I did make those payments. I am well over the emotional aspect of the CC companies being able to screw me over unilaterally on these deals.

However, I have never understood the logic of the CC companies in doing this. By creating a financial hardship on their customer they 1) increase the likelihood of not being paid at all or 2) increase the likelihood of being immediately paid, which would 1) decrease the steady interest they have been happily slurping up this whole time (regardless of whether it was \"enough\") and/or add even more bad debts to a balance sheet that is already straining under tons of those already. I have yet to hear a coherent reason why this self-destructive \"strategy\" would be used. Any thoughts?

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YOXIM
June 25, 2009 7:01 PM
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@Joshua Willis: It's a wonderful thing being able to make stupid generalized statements about people whose situation you know nothing about isn't it? You don't know what the $25K was spent on. Could have been a very important expense (medical or otherwise).

All sings point to OP making his monthly payments of $500+. Chase had no reason to hike up his monthly payment by 150%, but they did it anyway.

When the OP borrowed the money, he did so under certain terms. Now those terms were changed for no apparent reason. So no, it's not just a case of a lender wanting their money back; it's a case of a lender being fucking unreasonable. How many people do you know who can afford a $1000 minimum monthly payment on their credit card?

Don't be so quick to judge. You never know what kind of a tough situation someone might be in.

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WillG
June 25, 2009 8:44 PM
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@YOXIM:

Thank you!

Why is it that the CC companies can change the terms anytime they please and people like JW and Zanfires think that that is perfectly OK?

That decision by chase may well drive the OP to bankruptcy, thereby depriving chase of the rest of their money.

Trust me, if I tried to unilaterally change the CC agreement it wouldn't work, it shouldn't for the banks either.

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craptastico
June 25, 2009 9:38 PM
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@WillG: because it's in the agreement that they can change the agreement at any time. it's an unsecured credit line, which is the most dangerous to the lender so they give themselves that freedom.


it's a douche move to raise his payment like that, but to be honest i think the minimum payments have been too low for a while. sometimes they don't even cover interest, which really sucks the consumer into a whole.


if min pay had always been 5% i bet a lot of people wouldn't have let their CC debt get out of hand to begin with. it's a tough transition but hopefully will help in the long run

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K-Bo
June 25, 2009 7:28 PM
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@YOXIM: Not to say that what chase did is right, but everyone should remember that almost all companies write into contracts ways for them to change the terms without going against the contract, meaning that the high level summary of the terms SHOULD read like this : \"the terms are we can change the terms whenever we want.\" No promise is ever made that the original terms will be good for the rest of eternity.

It's totally uncool, but it's something I think about when I'm tempted to buy something I can't pay off that month. I ask not only if I can afford to pay it off at current terms, but is it important enough to risk having to pay it off at worse terms? So far the answer has always been no, and the only reason I could ever see otherwise is a major health emergency or something like that.

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SkokieGuy
June 25, 2009 7:38 PM
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@K-Bo: I must disagree. What other credit contracts, outside of credit card, contain a \"we can change the terms whenever we want\"?


Many contracts spell out penalties for specific actions, (don't pay your mortgage = we foreclose), but I think CC companies own the market on arbitrary changes. All the more reason the regulation is overdue, badly needed and doesn't go far enough.

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henrygates
June 25, 2009 7:16 PM
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@YOXIM: The terms of every single credit card I've seen allow them to change the terms at any time for any reason. Default rates, if you just so much as miss a payment, can jump to 30%. This is the equivalent of buying a car with a credit card and only making the minimums. Even if they 'hope' to start paying more in the future when things get better, it's like walking a tight rope over a lake of fire. They need a better plan.

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tbax929
June 25, 2009 6:59 PM
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@Joshua Willis:


OMG! You mean in this day and age when people are financially stressed they should be shamed for having some debt? How about next time you feel like trashing someone you take the time to know a little something about their situation.


I carry no credit card debt, but I certainly can muster up some sympathy for this guy's situation.

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Zanorfes
June 25, 2009 6:58 PM
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@Joshua Willis: Yeah, who'd think you'd have to pay them back. Stop living on credit people. There's a lesson to be learned here.

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CoarseLive
June 26, 2009 3:37 AM
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@Znrfs: Bsd n wht rd, th dbtr md n ndctn f wntng t vd pymnt.

Y r jst bng prvctv sshl.

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DanielleTexodus
June 25, 2009 6:54 PM
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@Joshua Willis: Considering how easy it is to get into debt due to unforeseen expenses (medical bills, car accident, etc.), telling people not to spend more than they have can be unreasonable.

Not it sounds like Greg and his wife were trying to do the right thing. they consolidated their debt at a lower interest rate and they were making payments. Perhaps they were even making payments larger then the minimum due to pay off the debt quicker, it doesn't say.

He's not complaining that Chase wants their money back. He's complaining that they doubled his rates simply because the current credit market ensures Chase that Greg can't go somewhere else.

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PSUSkier
June 25, 2009 6:53 PM
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@Joshua Willis: Yep. Because you know everything about Greg's financial history that lead to this. I think the only thing that annoys me more than credit companies are posters that behave like whiny 5 year olds.

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bloggerX
June 25, 2009 7:04 PM
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@Rectilinear Propagation: Oh my...you deserve another star.

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AMetamorphosis
June 26, 2009 3:37 AM
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Prhps cnsmrst shld gt CMPLT pctr f th Ps stry bfr pttng p hlf-ssd stry tht ds nthng bt nct ppl n hr t btch bck ∓ frth bt why thy gy ws 25K n CRDT CRD dbt t bgn wth ...


h wt, thts jrnlsm ... my bd.

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3 replies
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Etoiles
June 25, 2009 7:43 PM
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@AMetamorphosis: The \"why\" doesn't matter to the story one damn bit. The debt exists, and the OP and his wife have been taking proactive steps to pay it off within the means their salaries afford them. Period. The OP's story doesn't matter much either, except inasmuch as people who apparently have all the imagination and empathy of a shriveled walnut might stop leaping all over his back for existing. It's no-one's business now if the debt was incurred from buying 25 42\" televisions or if it was from an emergency surgery that insurance wouldn't cover. What matters is that he thought he had an agreement with the bank and the bank said, \"Ha ha, nice try, fat chance, DIAF.\"

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MinorAnnoyance
June 26, 2009 3:46 PM
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@Etoiles: Which explains it about as clearly as it can be explained. Thanks.

Unfortunately, the \"perfect\" ones in the world are never going to get it.

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EBounding
June 25, 2009 8:52 PM
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@Etoiles: Is Chase breaking the agreement though? Did the agreement say that the minimum payment fee would be fixed at 2%? I don't think it did.

My guess is they did this across the board and people with smaller balances wouldn't be hurt as badly. So they could probably negotiate it back down. But this is really the risk you take with credit offers. You're at the mercy of the bank when times get tough.

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Anonymous
July 1, 2009 3:00 PM
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@MinorAnnoyance: @MinorAnnoyance: @MinorAnnoyance: @EBounding: They didn't do it across the board, they did it to people who transfered high balances and have carried a balance for a lengthy amount of time.

There is reason to believe that Chase is hard up. You would think that Chase would lose either way, they lose the interest or the borrower goes bankrupt.

However Chase is probably betting that many people will settle their accounts for a lump sum which gets Chase the money it needs right now. Or that people will transfer their balances to another company, which also would get them money immediately. If they get their money quicker they can avoid federal bailouts and restrictions on pay.

Maybe it didn't say 2% fixed minimum payment, but it didn't say 2% variable minimum payment either. It is an underhanded mobster approach to sucking us dry instead of owning up to the fact that they made the decision to make risky loans and that made an agreement on paper with their borrower.

I would be SOL if my balance was on a chase card. I am carrying 4800 from medical bills at 5%. I was laid off and am lucky to be able to donate plasma to make my payments. BOA changed my terms from fixed to variable and I missed the bulletin that was in with convenience checks--which i shred. All of them are trying to bend us over as fast as they can before the new laws kick in.

Take others advice, go to a CREDIT UNION. It is safe, reliable, non profit, and you are a co-owner.

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angelzero
June 26, 2009 3:38 AM
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Stp blmng th f**kng cnsmr, y s*hts.

Y knw wh y r.

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7 replies
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angelzero
June 26, 2009 2:46 PM
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@angelzero: wow, I got disemvoweled for supporting the OP and railing those who blame the OP?

Awesome. Good job.

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Stephmo
June 25, 2009 8:12 PM
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@angelzero: Honestly, what ever happened to the disemvowelment for OP-blaming? There should be massive amounts of it...it's obvious most of the commenters didn't read the article and are just looking to blame the OP. I'm usually not one for a lot of moderation, but if there ever was a time for some swift and fast action to show some jerks what's what...

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Rectilinear Propagation
June 25, 2009 11:29 PM
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@Stephmo: Maybe Roz is on vacation. She usually replies when I e-mail her but I haven't gotten a reply in a while.

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ugadawg
June 25, 2009 7:56 PM
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@angelzero: And how's your day going. I hope swimmingly. :-)

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angelzero
June 25, 2009 8:54 PM
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@ugadawg: it's going great, thanks for asking! :D

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Hil-fish
June 25, 2009 7:55 PM
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@angelzero: The trouble is, I don't think they do. Which makes me want to scream.

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ExtraCelestial
June 25, 2009 8:40 PM
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@Hil-fish: Yes. Reading through this was painful.


Although the Hills-esque \"you know what did\" made me giggle.

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2 replies
June 26, 2009 3:55 AM
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M, hvng lrg blnc n yr crdt crd s dmb.
Ths shld b cmmn sns. ndrstd ths bfr cld vn drv. Bt hvng lrg blnc nd TLLNG VRYN bt s s tntmnt t bng Sprngr trsh.
Why brdcst yr cntnng mstk!?
Cn w stp blng t th stpd ppl ∓ cmpns?
Pls?

Tht sd, mnmm pymnt shld rrly b prblm s y shld b pyng ff yr crd's blnc ch mnth nd nt mkng prchss y cn't ffrd.

Lv BLW yr mns ppl!

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4 replies
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Skin Art Squared
June 25, 2009 8:46 PM
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@Coop:

Nothing in this world.... and I mean NOTHING..... irritates & infuriates me more than someone preaching their version of morals onto someone else.

Sadly, this concept never seems to register with the people that do it.

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2 replies
June 25, 2009 9:58 PM
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@BZMedia: \"someone preaching their version of morals onto someone else\"
...such as what you are doing? Talk about hypocrisy. O_o
So it seems what actually infuriates you is just an opposing viewpoint.
Good luck in life with that. :-\\
Besides, preaching about how 'our morals are better than theirs' is THE BASIS for Consumerist.com.

Btw FTA: \"consider starting some sort of debt management program\" is the nice way of stating my original final thoughts (above).

//College paid off, bills paid, cards paid off. No hypocrisy here, just some (apparently unwelcome) advise from someone who doesn't have a problem with debt.

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gravitus
June 25, 2009 10:27 PM
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@Coop:

uggggggggggg.

I am in debt. I have a young child that has very high medical bills that were not covered by my employers insurance. I took the option of transferring those bills to a fixed rate credit card with Chase so as to not default on the payments and take care of my bill. Chase did this to me also.

Just like you.... //college paid off, all bills paid, own vehicles with no payments. Never had a bounced check or missed a payment since I was a teenager, make above average money.

The only CC I have is with Chase. The medial bills that were left were what was still open after refinancing my home to cover the other 90k in medical bills. So I guess I view your opinion as less than informed and feel that you are indeed painting everyone with a very broad brush.

So I guess the question I have for you is this: Do you think I am went all willy nilly with my credit card because I didn't learn proper credit management as a youth?

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Coles_Law
June 26, 2009 2:31 AM
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@gravitus: I hope your situation works out. I'm a quarter-step away from being in a similar boat debt-wise. You also show much more patience than me with all the holier-than-thou people you've responded to.

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CheritaChen
June 25, 2009 8:56 PM
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@BZMedia: And it never will, no matter how obvious their hypocrisy seems to us.

@Coop: The point of his story wasn't about how he got into debt or how he chose/was forced to carry it. It was to let everyone know how idiotic Chase's practices are and the potentially devastating results of their (I guarantee you) computer-driven account management. This is anti-consumer behavior, without question.

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JohnQPublic
June 25, 2009 8:50 PM
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@BZMedia: and I was just going to tell this guy \"Fuck you, Douchy McDoucherson\", but your way was more polite.

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sanjsrik
June 26, 2009 4:57 AM
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Was anything in the original \"article\" verified by secondary sources such as from Chase that they are doing this or by contacting Chase for their response?

Fearmongering and fingerpointing, while fun and entertaining, really shouldn't be reported as real news unless it's on Fox.

Unless now Consumer Reports is a division of Fox, which I can understand, since well, the accuracy rate is about par.

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3 replies
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Anonymous
July 21, 2009 1:51 PM
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@sanjsrik: Obviously, you don't have a Chase Card, or you would have gotten the same Note. This is a fact. Chase is raising Minimum Monthly payments due from the previous 2% to 5% on Revolving Credit cards. Especially those with the lower interest rates, as they were handing them out like candy a few years ago.

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lasbrisas
July 17, 2009 9:57 PM
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@snjsrk: Dn't frgt whr y r. Ths s Cnsmrst.cm, hm f th snstnlstc \"scrw th mn\" xtrm rprtng f strs tht hv nthng t d wth fcts r rl rprtng r jrnlsm. Ths r nt rprtrs nd thy cn nt b xpctd t ngg n rl fct chckng. f cnsmr hs stry, thy wll pblsh t hr, smngly n mttr wht. f cmpny hs smthng t sy, thy wll twst t rnd nt smthng nfrs. Th cnsmr s lwys rght n mttr wht n cnsmrst.cm.

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ohenry
June 27, 2009 12:37 AM
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@lasbrisas: Rage much?


I don't think that it's their job on this type of site to call Chase and verify this. I don't think they CAN verify that.


Also, other posters have said that they had similar experiences.


If you really hate the philosophy of this site, how about not reading it?

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ageshin
June 26, 2009 5:07 AM
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I would like to point out that the idea of transfering the debt of one card to another with a smaller per cent rate was promoted by banks. This was because the banks didn't want you to pay off your account every month but rather pay the intrest on the balance each month. Consalidate was the great thing to do. Remember banks make money on those who can't pay off their accounts. Off course now this policy has come back to bite everyone on the ass.

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FredTheCat
June 26, 2009 5:44 AM
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This post really hits home. I got the same notice yesterday from Chase. Let me explain my situation.


I work in what is typically a very well paid business and have for 20+ years. My largest client for the last 10+ years has been a certain animal-oriented financial company, and I provided elements for those infamous \"executive resort meetings\" as well as work for other clients. I wasn't getting rich but it got myself and my family by.


Then towards the end of last year came the big news that the animal company was being consumed. I was assured that things were proceeding with our project as usual, putting together the elements for the 2009 events. Work continued through the holidays, into January and February...and then they told us the events were cancelled, exactly as a large milestone payment was coming due. We now had months of work done with no compensation for it and suddenly had to scramble to find replacement work in an economy that crippled my industry.


Over the years I had amassed a number of credit cards with various financial institutions and took advantage of offers for 'balance transfers' that were essentially signature loans at 1.99-3.99% for the life of the balance. I used these to finance business and personal expenses between projects (no vacations, fancy cars or big-screen TVs here) and was routinely paying off large amounts using the proceeds from the next project. I >always< paid more than the minimums, always more than even the minimums plus the newly accrued interest. I'd often write checks paying off thousands of dollars worth of credit at a time. The banks were happy, I was happy, everybody was happy, for more than 15 years.


Then the bank consolidations happened, and suddenly our nine cards from nine institutions became nine cards from FOUR institutions. Chase now controlled 5 of our cards. No problem, the routine continued as before, the banks were happy, I was happy. They kept encouraging further extensions at 3.99% or less for balance life and I kept paying them thousands of dollars at a time as projects rolled in.


Then came that animal situation. Thankfully, the balance transfers kept myself and my family afloat and enough work was dribbling in that I was staying ahead of the curve. I would continue paying down the debt in anticipation of the next gig and we'd be ok...a little close to the vest, but ok...things would pick up eventually.


A couple months ago Chase bumped the minimum payments on one of my cards to 5% and left the others as is. Fortunately there wasn't a huge balance on that card so the increase was fairly minor and I was still paying more than the minimums. The payments were now a little more burdensome, but still we'd survive and our budgeting took the expenses into account.


Which brings us to yesterday, when a notice arrived raising the minimum payments on one of our cards that DID have a substantial balance...substantial to the tune of 5 figures. The new minimum was WAY outside of our budgeting. This, combined with the other payments pushed us over the edge and made the debt untenable.


We were ok under the original terms under which the loans were created but Chase got greedy. Instead of standing by and collecting monthly payments of more than the 2% minimum (FAR more when work was in play), they want at least 5%. It simply couldn't happen.


So, Chase...instead of having a pair of customers with stellar credit ratings gradually paying off upwards of $50,000...you're going to get nothing. We laid the groundwork today for filing Chapter 7. Times are tough for everybody, Chase, not just you. WE didn't get a massive taxpayer bailout and simply can't afford to play your game.


What Chase has done here is exactly like the story of the dog with a bone looking in the water and, seeing a second bone, drops the one he has to get the one in the reflection. Instead of two bones, he now has no bone.


We're prepared for the fact that our credit will be screwed for most of 10 years. It won't be easy, but we'll get by. And hey, in 10 years I'm sure that whoever ends up buying YOU will be more than happy to extend us new credit.


FORMER Chase customer,
FredTheCat

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3 replies
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SlappyWhite
June 27, 2009 5:14 AM
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@FredTheCat:

I understand times are tough,but posts like yours upset me. Everyone is raising a stink about the minimum amount you have to pay back, but I'm sure no one was complaining when the bank let you borrow over 50k to finance your projects in rough times.
And now, as a way of saying thank you, you're gonna file for bankruptcy, and hope ill will on the bank that loaned you money in the first place. Classy.

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FredTheCat
June 27, 2009 8:46 AM
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@SlappyWhite:


No one was complaining while I've been paying back the loans as agreed all these years, right up until two days ago when they chose to change the terms. If they want to manipulate the agreement on a whim in such a way that it forces me to choose literally between paying them back or feeding and housing my family, there's really no question. I'm pretty sure that I wouldn't be able to get away with saying to them 'sure, you've loaned me all this money but I now demand you loan me two-and-half times as much immediately', they'd throw ME to the wolves too.


Sorry if my insolvency offends you. Here's hoping you don't find yourself over the same barrel.

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SlappyWhite
June 27, 2009 10:28 PM
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@FredTheCat:

My whole point is, they loaned you money when you needed it, and now you're essentially reneging on the whole deal. When you did the agreement, it clearly notes they can change the terms. You agreed to it. Now abide by it. I'm assuming that a man who can get over 50k in limits would hopefully have other options to get the money transferred someplace. Or, pick up some hours of OT at work or get a second job.
Also, dont use the \"WE didnt get a massive taxpayer bailout\" line. A lot of banks, Chase included, never wanted that bailout money, didnt need it, and already have paid it back. So that doesnt even factor in. Besides, it was government money, not taxpayer money.

I challenge anyone to show me on a pay stub or a W-2 where they see \"bailout\" as one of their deductions. With Obama's new plan, we've actually gotten a few more dollars in our paychecks. Also, bailout money was originally intended to help with the housing mess and for new lending, not people that were overextended on their credit cards.

In addition, how long would it take you to pay back over 50k at 2%? Forever! I hope you find out options FredTheCat, because even bankruptcy is tougher these days. The law is stricter and in a lot of cases doesnt dismiss the debt, but provides a structure for repayment.

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FredTheCat
June 28, 2009 5:07 AM
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@SlappyWhite:


Ohhhh, I get it. You work for Chase! :)


I'm confused...where do YOU think the government gets their money from? Santa Claus? Mowing lawns on the weekends? EVERY dollar the government spends is taxpayer money. That's why they get so upset when taxes aren't paid.


As a self-employed person (successfully for dozens of years up til now) in a line of business that has been decimated by the economic downturn, there are no \"overtime hours\" to work. Get a 'second' job? Great! Tried to find one lately? 11% unemployment means people are lucky to have a FIRST job, let alone a second.


If you actually read the original comment, you'll notice that I >wasn'tevery month< isn't.


And sure, the agreement noted they could change the terms. So I guess if your card changed the terms to say \"you owe us your entire balance tomorrow\" that would be fine with you, right? After all, it said they could.


As a renter with no assets to speak of, no retirement accounts, no investments, a family to support and (thanks to my major client going nuclear in mid project) income for the year to date of under $10,000 we easily qualify for Chapter 7. Our meager savings has been consumed making up for the shortcoming. In fact, I could have made about four times what I've made in the last six months and still qualified. Do I >want< to do it and suffer the consequences for the next 10 years? No. But I will, because I simply have no other choice. I have no other choice simply because of a company's completely arbitrary decision that my following the existing terms (as has happened for years) just wasn't enough. And just as the terms of the credit card 'clearly note' that they can change the terms, the terms of the LAW 'clearly note' that I can discharge it.


Before you judge somebody, walk a mile in their shoes. Short of that you're just blowing smoke.

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watson2001
June 29, 2009 1:30 AM
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@FredTheCat:


I am sorry to read posts like FredTheCat because many business owners become too dependent on credit cards as being a primary means of getting a loan. The problem with a credit card (regardless of how good the terms are) is that they are not the best means for running a company.


Credit cards are ideally used when you know that you will be able to pay off your bill at end of a month. If you are running a business and you must carry over expenses from month to month, try by all means in heaven and hell to get a line of credit from a bank or some other type of conventional loan.


It frankly sucks that when you have to use a credit card to help you out, you are handcuffed by your previous debt (even if it were at a low interest rate).


I wish you luck on your situation, but the takeaway for others should be don't use credit cards to carry over debt. The only time it makes economic sense to carry a balanceover in a credit card is if is if you can arbitriage the difference (I can earn 5% in a CD while I pay chase 3.99% back in interest). The other time one should consider using their card is if an emergency occurs (lost job, health), but a rainy day fund may go along way in mitigating this situation.

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Anonymous
June 26, 2009 2:51 PM
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@FredTheCat:

Amen. I agree 100%.

Three days ago I took advantage of a low fixed APR BT to consolidate. I finished law school and have tremendous student loans that I'm working on paying off. The BT made sense, as it would allow me to continue paying off the card in a way that fit with my budget.

Fast forward three days. Minimum payment now tripled, it's impossible. Chase doesn't care. No opt-out.

Where does that leave me? I don't own a home, I have impeccable credit, and I have a lot of debt that I was managing and paying down. My income will gradually increase and all my debts will be paid. So now I either default or just throw in the towel and file for the big B. So much for the last 11 years of working up a good credit score for an eventual home purchase.

And what DOES Chase suggest? Transfer the debt to another card! Wow, not really an option when they own practically all my cards.

Sigh.

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Anonymous
June 26, 2009 6:11 AM
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Some of these comments are clueless. I also got a letter. I let my so consoliate some cards after college. The total was $27,000. He has been making $500 payments. He lost a very good job, so I have been making the payment of $400. I am retired and on a fixed income. No problem, I budgeted the $400. The balance is down to $18,000 and we are making good progress. Out of the $400 payment, only $60 is interest. So out of the blue, Chase notifes me that the minimum payment is jumping from $400 to $900. Tell me how this is a good thing. They couldn't adjust the low introductory APR because it was for the life of the loan. So, they came up with this way to circumvent this. They sent out these notices to their customers with high balance/low introductory rate accounts. They are hoping people will default and they will then be able to raise the APR to whatever they want. If I cancel the card, the balance is due in 30 days. I did call and they offered me a 60-month, higher APR than the introductory rate fixed payment plan. They got their higher APR because I had no choice. I have a FICA of 820. I pay my bills. Tell me how you think this was a good thing - to threaten to ruin me by more than doubling my minimum payment when I have been faithfully paying on this and paying off the balance. This is hurting people, not helping them.

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Anonymous
June 26, 2009 6:55 AM
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Why is it hard to understand why this is wrong. Chase loans money at a specified rate (3.9 to 5.9) for the life of the loan and the payments are 2%. Later Chase acclerates the terms by raising the payments to 5%. Does the fact that they just unilaterally changed the terms of the agreement escape people. It is the same as if your morgage company doubled your mortgage on your house from now on, just because they wanted to.

And no, they are not allowing opt out on minimum payment changes. But they will allow you to return to the standard rate and 2% payments. They are strong-arming people off the intro rates.

There is already a class action suit in progress on this - Chase started screwing the intro rate customers last fall.

Get it straight, this is not about credit cards, fiscal responsibility, or dead-beats. This is about a bank that has unilaterally decided to change the terms of its agreement in order to force customers to accept higher interest rates.

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squinko
June 26, 2009 11:39 AM
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@Datacloud: Click on the little picture of the A next to the post. It's not that he typed out the post with no vowels on purpose. It's called disemvowling and it happens to posts from idiots and trolls (and the OP of this thread happened to be both).

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squinko
June 26, 2009 2:05 PM
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@LadySiren: I hope they didn't buy that glove from Wal-Mart.

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magnus95
June 26, 2009 12:11 PM
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Back in the credit roaring mid-2000s, I purchased 2 slightly used cars (~7.9% interest) for about $24K after trade-ins, taxes, etc. Chase offered 2.99% fixed for the life of the loan with no fee way back when. This was less than half of my available credit, so I wasn't too concerned about my credit rating. I took them up on it and paid off the car loans. I received the titles, and basically moved secured debt to non-secured at a substantial interest savings. Always plan on bankruptcy. I continued making the payments as I would have to the bank, and actually paying much more than the minimum. (Even had 2 job losses over that period and moved across the country). I still have these 2 used cars, but about $5K left on the card. I have never used the card beyond this original purchase. Chase raised my minimum too with no opt-out feature. I've heard this is in order to acquire more capital to loan to others at higher interest rates. (As if these companies can't make enough with the mechant transactions and free tax payer money). The way I look at is that I got a great deal, but it's time to pay off the card. I will be sending them a full check to pay it off after they raise the payment in August. I still have the 2 vehicles and enjoyed the nearly free ride. I've also milked loads of free gas out of Chase for their BP and Marathon cards offering 5% rebates. (That too will end soon. When that happens, use your local grocery store perks). We all knew this easy ride was going to end soon, just slowly move back to cash. If you have too much debt to handle the new minimum, bite the big one and transfer it to other cards now while you can. CapitalOne is offering no transfer fees at your normal APR. Also, try a home equity loan, or a personal loan to extend the time frame for payback if you have to. A 401K loan might also be an option (not recommended). Finally, Chase will offer you 22.99% (Ouch!) if you still need the 2% minimum. Either way, they win this one. Just remember, there are those of us out there who got the better of them over time if it makes you feel better. And regardless what you do, get out of debt! Don't be a slave to the banks. It will sap your creativity and lust for life. For all those with reduced incomes now and job losses, it will get better. Be willing to pull the kids from school, sell the house, and switch careers. Life is about change, but also about new experiences you have to search for. Fear can paralyze, but you can also run.

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Anonymous
June 26, 2009 1:49 PM
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Not for nothing, in the parlance of New York City, but this is another example of people living outside of their means... WAAAAAY outside of their means.

I have been guilty of this in the past but people over the past ten years have been borrowing from Peter to pay Paul with these balance transfers \"lilly padding\" from one card to another while they are amassing more debt.

I have friends like this that don't have two nickels to rub together, but they marry some dumb woman who wants to instantly live in the life she was accustomed to growing up at home. The only difference is that the relative cost of living does not allow it, and couples just starting out should not do this to begin with.

I know friends that have low paying jobs but have 42 inch plasma televisions, Xbox, a closet full of fifty dollar jeans and then bitch about not having any money and have panic attacks because of their debt.

It took me a long while to get there, but I paid off all of my credit cards, have a modest amount of student loans (30k owed but I have three college degrees and all of them contribute to the salary that I make today)

I took my tax returns and threw them all at my credit cards and paid off hundreds, living off of cans of soup in my cabinet and brown bagging lunch, and I cut my electric bill in half by unplugging everything in my apartment but my refrigerator and my DVR because it records stuff during the day.

I got rid of Netflix, I got rid of Sirius Satellite Radio, I scaled back my car insurance and took a defensive driving course to lower it even further.

I decided that for every five concerts I wanted to go to (living in NYC that is like a week's worth of concerts) I would only go to the ones I wanted the most. I stopped collecting crap like DVD's that I only watched once and rented games and went on gamerankings.com to check before I invested sixty bucks in a game that was a lot of hype and wound up garbage.

This article is indicative of a nation of adult infants that want it all but don't want to wait or save. Debt is built on the disease of being addicted to instant gratification.

I don't know if this couple really needed to spend all the money that they did, but this is starting to be the norm. My grandmother just died at 86 and never had a credit card but managed to get everything she wanted out of life by saving and putting things on layaway.

If you don't have health insurance and you have to pay a hospital that is one thing, but the things that people spend money on and say they \"needed\" is suspect at best.

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antijamsect
June 26, 2009 2:44 PM
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nice. i guess everyone needs to get used to this kind of thing... I just got a memo from BoA yesterday that they are switching from fixed rate APR (which is what I had) to variable rate in July, thankfully I don't have a balance on that card, so I will just stop using it. I really don't feel like subjecting myself to a surprise interest rate every month, based on their whims.

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coraspartan
June 26, 2009 9:05 PM
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@antijamsect: I got this memo yesterday too.

My question is: can I reject the change and then continue to pay the card off at the original rate?

I have a very large balance and only two other small credit cards so this is a huge deal for us. We have to figure out what we're going to do before the opt out period closes.

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Anonymous
June 26, 2009 11:30 PM
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The real problem with this is that Chase is not allowing customers to \"opt out,\" that is, close the account and continue paying at the old terms. When these customers agreed to transfer their balances to Chase, they entered into a contract. For Chase to do this, and not include a right to \"opt out\" is an egregious breach of contract.

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Anonymous
June 27, 2009 1:16 AM
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Unfortunately, for most their is NO OPT OUT option. This is because in Chase's original T&C on their CCs, minimum payment increases were NOT included as a change that would come with an opt out clause. The only option is to call Chase and see if there is anything they are willing to do for you (though I doubt it). I agree that this helps pay off ones debt faster, but I don't think it should have been this drastic. For example, if Greg from this article had simply been required to make a 2% (of current balance) FIXED payment every month (which probably could easily be budgeted for, since he had been doing it all this time), then even a $25K balance @ 5.99% APR would be paid back in LESS THAN 5 YEARS. The biggest problem with the \"minimum\" is that since it is 2% of your monthly outstanding balance, it is always decreasing, which means it takes 300+ months to pay off that same $25K @ 5.99%. I just don't see how CC companies don't get or think of that option. Instead they do what Chase just did, and in the long run, probably loose more due to charge offs / bankruptcy from those who just can't afford the 3% payment increase.

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Anonymous
June 27, 2009 1:21 AM
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To the Chase apologists:

What you don't get is that Chase changed the terms of an existing contract. My wife and I took out a loan on a Chase credit card to do home renovations, because we got a fixed _permanent_ interest rate of 2.99% -- our only credit card debt. We've been paying it off incrementally for a year, and will/would have had it paid off in about another 3 years. But now Chase wants to add $1000 to our monthly minimum payments, which will bankrupt us.

It's not about consumers taking on debt irresponsibly; this is about responsible consumers getting screwed by a corporation changing the terms of an agreement, in hopes of driving away responsible consumers who had the foresight to lock in low interest rates by way of a binding contract.

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failurate
June 27, 2009 4:43 AM
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Is it possible that Chase has figured out that they can make faster money on defaulted loans vs loans in good standing that are being paid back slowly?
They push their customers into default, then report the pool of defaults to the government who in turn cuts them either a tax break (if they pay any taxes at all) or more TARP money to pay for the losses. Why wait for a trickle when you can score a windfall? Yay for socialized losses and privatized profits!

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Bs Baldwin
June 27, 2009 7:07 PM
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if you have over 20k on a single card, apply for a HELOC; your rate won't increase vastly and the minimum payment percentage stays the same.

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Anonymous
June 28, 2009 3:10 AM
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I got the same thing, my boyfriend is unemployed and I have to pay minimums to be able to pay the mortgage. I called them up and said, I can't pay this, and the CSR said that it would be possible to work out a fixed amount payment plan if I closed the account. Number is 877-609-8485 for their \"special services\" department.

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Anonymous
June 30, 2009 12:15 AM
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Here is what I don't understand from Chase's perspective. I agree that this increase potentially helps pay off ones debt faster, but I don't think it should have been this drastic. For example, if someone who has a large balance at a low fixed APR for LIFE, then try simply requiring them to make a 2% (of current balance) FIXED payment every month (which probably could easily be budgeted for, since they had been doing it all this time), then even a $25K balance @ 5.99% APR would be paid back in LESS THAN 5 YEARS. The biggest problem with the \"minimum\" is that since it is 2% of your monthly outstanding balance, it is always decreasing, which means it takes 300+ months to pay off that same $25K @ 5.99%. Even at 5% minimums, because of the decreasing amount of payment required each month, it would STILL TAKE 10 YEARS to pay back the same $25K @ 5.99%. I just don't see how CC companies don't get or think of that option. Instead they do what Chase just did, and in the long run, probably loose more due to charge offs / bankruptcy from those who just can't afford the 3% minimum payment increase. Just my 2 cents.

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Anonymous
July 1, 2009 12:06 AM
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First off, in our case we used a 3.99% promo that was cheaper than a used car loan. A 2% minimum payment was less than what we were sending- the goal was to have it paid off, including interest, in 5 years. By raising the payment to 5%, the minimum payment is significantly higher. Imagine a car loan payment doubling, and you'll get the picture.

Second, those who always talk about \"paying cash\" are ridiculous- I suspect you always pay cash for cars, major house repairs, etc. Lucky you. Meanwhile, in the real world- people take loans. And a 3.99% loan was a good one. It's only people who had low interest credit card balances and were paying them off who are getting hit. Note: we do not use these cards for minor purchases- only large ones, where the locked in interest rate was less than our line of credit.

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Anonymous
July 6, 2009 7:52 PM
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Well, it seems to me that Chase just wants to eliminate the low interest rates on those consumers who took advantage of the enticement balance transfers. The new balance transfers have higher up front charges. Did Chase get bailout money? Tons of it? It does not make sense to write off these older loans that borrowers are able to pay monthly at the current 2% payment with no problem. This 5% increase is not reasonable. A 1% increase for a total of 3% could be tolerated by most, I believe, but 5% is ridiculous and was not the original agreement that came laced with honey on those original balance transfers. Well, I guess jobs have increased for credit counselors so this helps unemployment. I would hate to budget a car into my monthly income only to find out the payment was going to more than double; well I would just lose the car and then lose my job and then get depressed and then need a doctor and then create more bills than I could afford. Chase created a problem where none existed. Sure some people cannot even make the 2% payment but why go after the ones who are making that payment?

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jamda
August 28, 2009 4:47 PM
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There are just way too many judgemental idiots posting to this article. Really, we should \"thank\" Chase for raising the min? For breaking the terms of their agreement? Not me.


I also have approx $25K on their card for 4.99% suppposedly forever. It was a far better deal than a second mortgage or any other loan to cover unexpected medical debt. Of my $500+ monthly payment, over $400 goes to principal! So the whole thing gets paid off in 5 years under the original terms.


I never missed a payment and got a letter from them, pay us $1300+ a month now . . . yeah right, like I have that much. So my only choice is to take a 7.99% rate for 2 years and then 15% thereafter in order to keep my payments where I can afford them and not ruin my credit rating by accepting some hardship path which is the only alternative. So Chase managed to greatly increase their income and slow down my capability to pay them off anytime soon. So much for their benevolence and their \"doing me a favor\". Some of the commenters here are really dense.

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