Chase changes the rules

January 30, 2009 6:56:56 PM PST
Chase is changing the rules of many of its credit cards and the changes are costing consumers big time. Chase credit card customers are contacting Michael Finney in record numbers over these surprise changes. Nearly every inquiry asks the same question, "Is this legal?"

Brad Hunt from San Jose showed 7 On Your Side's Michael Finney the paperwork for the great Chase credit card deal he signed up for.

"They offered good customers 3.99 percent for the life of the loan, interest rate," said Hunt.

That was for transferred balances, so Hunt transferred some balances paying three-percent, $170 in his case, for the privilege.

"Come January the terms of the agreement changed; to a $10 monthly fee, which ends up being $120 a year and they changed the two-percent minimum payment to five-percent of the balance of the monthly payment," said Hunt.

Here's the notice: "A new account service charge of $10 a month" and next line down says "Your Minimum payment due will increase from two to five percent".

"Something absolutely should be done because this is simply beyond the pale," said Joe Ridout.

Ridout is with Consumer Action and says he's never seen a credit card practice this abusive.

"The people who accepted this offer were those who really read the fine print. They understood the fine print and then Chase went and erased the fine print and wrote new fine print that was very advantageous to the bank and allows them to gouge their card holders," said Ridout.

So what is this costing Hunt? His old minimum payment of $168 changed to the new $414. So can the bank do this?

"It is certainty unfair the problem is I don't think it is illegal. Well, here's the thing?if you look back at the original opening documents. Chase says we can change our terms for any reason at any time, and if you challenge them they say we made a full disclosure," said Mark Anderson, a well known San Francisco consumer attorney.

And what does Chase say? In a response to 7 On Your Sides' inquiry a spokeswoman wrote: "The changes... impact less than one-half of one percent of our accounts on file. Chase is a responsible, careful lender. We constantly evaluate the risks and costs of funding credit card loans. These are factors we have always monitored and processes we have consistently followed. In the challenging economic environment we face today, they take on added importance."

"It just seems like they are trying to make up for some of their loses they've incurred because of the downturn in the economy," said Hunt.

It is extremely important to read every piece of paper that comes in the mail. Banks are increasing fees and interest rates. It is like the Wild West out there. The Wild West during a bad economy. Michael Finney said he has a credit card that just increased his interest rate to a 20-percent minimum. He says he will be canceling that card.

Chase is receiving $25 billion from the national bailout. This concerns lots of consumer organizations and they're saying their consumers are getting hit twice: once as a taxpayer and now as a customer.