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Chase Drops Controversial Credit Card Fee

Under pressure from New York Attorney General Andrew Cuomo and a class action law suit, J.P. Morgan Chase will drop a $10 a month fee it imposed on 184,000 credit card customers earlier this year.

It will also refund the $4.4 million in fees it’s already charged customers since January.

This was one of the most egregious examples of a bank mistreating its credit card customers that we’ve seen and prompted an angry backlash against Chase.

The fee was levied on cardholders who’d carried a significant balance for more than two years at low promotional rates.

Most of those customers had responded to ads that promised to charge no more than 4.99% for the “life” of the loan on balances transferred from other credit cards.

JPMorgan Chase CEO Jamie DimonCustomers who called to complain about the new fees were told they wouldn’t have to pay if they accepted a higher 7.99% interest rate.

Chase was reneging, plain and simple, and trying to force those customers to pay a higher rate.
It also raised the minimum payment for those customers from 2% of the outstanding balance each month (plus interest, of course) to 5% of the balance.

That change remains in place.

The fact that Chase had to be forced into honoring its commitment to these customers shows how the big banks still don’t get it.

So let me try and explain to JPMorgan Chase CEO Jamie Dimon and all of his buddies why consumers are so angry at the banking industry in the simplest possible terms:

You’re being saved from your own greed with billions of dollars from the nation’s taxpayers, so stop abusing those taxpayers who also happen to be your customers.

It doesn’t make us want to help you.

Comments (6)
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6 Existing Comments
  1. itsnotademocracy said:
    on April 1st at 11:48 am

    reneging on a contract? surely not! But wait….how come it’s OK for the AG of NY and the President to reneg on contracts with AIG employees? Oh right…that was different…they weren’t ‘popular’. There was an angry mob of citizens being incited by the media to throw bricks through the windows of anyone who dares work at AIG.
    Why should Chase play by the rule of law? Godbama doesn’t.
    Maybe Chase should just start a campaign to demonize these customers so that everyone in America dumbly follows the herd and thinks they are ‘bad’. Then it will be totally OK to persecute them.
    …I believe that was the way one bad Austrian played it back in the Third Reich…

  2. Mike M said:
    on April 2nd at 04:10 pm

    People really need to learn about their ability to legally opt-out of changes. If they’re presented with such a change to their card agreement, they have the right to opt out of the changes, with the understanding that the bank then has the right to choose to close down the account.

    Nothing would have prevented Chase customers from saying “thanks, but no thanks, I don’t want these new changes”. They would have had to find a new credit card to buy things with, but they could have continued to pay down their balance at no more than 4.99% and without any monthly fee.

    The only thing Chase did wrong in this case is that when customers called, they weren’t being clearly given the choice to opt out. They were told they could have the $10 per month fee or a higher interest rate. They should have been given the third option.

    Had they done that, they would have been doing nothing wrong. Any claims that they should be forced to keep the same terms with open accounts indefinitely are silly…

  3. Chuck W said:
    on April 6th at 01:06 pm

    Mike, I think you overlooked the fact that the customers had a contract which specified that the low interest rate was to be kept for the life of the loan on balances transferred. Chase is not the first bank who has tried to weasel out of honoring a contract similar to this.

  4. Maximara said:
    on November 8th at 10:58 am

    Mike, you really don’t get it. Life of the loan means LIFE OF THE LOAN. If anyone else did this they would be in court for breach of contract so fast that it would make their heads spin and lose big.

  5. Justin Otherbanker said:
    on March 3rd at 08:46 pm

    Mike, you are also so not getting it. A bank can not contractually promise certain conditions and then arbitrarily change them just because they are not as smart as they thought they were or that their assumptions did not prove to be accurate or financially beneficial. The customers only switched the account based on the “offer”. Reneging on the offer is just bad business and certainly gives the customer pause to consider legal actions. Seems banks just want everyone else’s money to use so they can charge interest, fees, penalties and every new possible mechanism to get money from the very people that make their business possible in the first place.

    If we opened an account and it required a minimum balance of say $1000 for certain other benefits and privileges, would the bank be ok if we just reneged on this part of the agreement and refused to keep the minimum balance and would not pay any charges previously agreed to? I am sure that “the Bank” would have a very different view on that!

    So, what’s fair is fair, you can’t just have it all your way, or eventually folks will realize that we don’t really need you at all and that there are other models and avenues for holding cash and providing loans that don’t involve being forced to deal with egregious policies and predatory behaviors. What if every single customer of your bank suddenly came to finally realize that you were part of this monumental financial problem and got fed up with your attitude toward the very people that provide the capital you require just to function as a bank, and decided to go to some other “not to big to fail” bank and do business with them? Just a thought in case you are getting to big for your own good.

    Lastly, the most obvious lesson learned from this last financial debacle is that most everything that is spewed out by Wall St. or the banking industry is for their own benefit and it seems they care not whether it trashes the entire world economy as they are so sure the government will always be there with a soft cushion should they fail and need to be bailed out by the citizens. It is no wonder that the industry is so vehemently against any reform concerning regulations and consumer protection, as this is the only way to protect the bankers from themselves and protect the rest of humanity as well.