Chase Hits Cardholders with New Fee and Rates

February 25, 2009

By Jonathan Cohen:

Last month, several hundred thousand Chase cardholders were shocked by a new fee and minimum payment amount in their monthly statements. Effective immediately, J.P. Morgan Chase, one of the nation’s largest credit card issuers, is charging a $10 monthly service fee (or $120 per year) to cardholders who took advantage of Chase’s balance transfer program and haven’t made significant headway towards paying off their balances over the past two years.

In addition, Chase has raised cardholders’ minimum monthly payments to 5% (up from 2%) of their outstanding balances. According to online reports, Chase will only agree to waive the new fee and keep minimum monthly payments at 2% of the outstanding balance if cardholders agree to increased interest rates.Complaints allege that the new monthly fee directly violates the terms of Chase’s balance transfer program, under which cardholders’ transferred balances were subject to a fixed APR of 2.99, 3.99 or 4.99%.

Last month, a federal class action lawsuit was filed in California against Chase on behalf of cardholders affected by the new monthly service fee, alleging that cardholders who participated in Chase’s balance transfer program are being forced to decide between paying the service fee and increased minimum monthly payment or accepting an increased interest rate of 7.99%, which in some instances, exceeds the previously promised fixed rate by 5%.