Chase Pressured to End $10 Monthly Service Fee
April 1st, 2009 by Kenneth Long
Chase has discontinued the $10 monthly service fee charged to some accounts with balance transfer balances. Chase spokesman Joseph Evangelisti revealed that Chase “decided to discontinue this practice because of customer feedback.” New York Attorney General Mario Cuomo had more to say, suggesting that Chase was strongly encouraged by his office to reverse course on the unpopular fees.
Chase initially added a $10 monthly service fee beginning in January as an attempt to recoup some of the profits lost through higher default rates of its cardholders. This was in addition to the change in account terms that required certain cardholders to either increase their monthly payment by 150% or to incur an interest rate hike.
Chase has reportedly reversed its decision to impose the $10 monthly service fee. Additionally, it has provided credits to these cardholders to reimburse them for previously charged fees.
While this is welcome news for many account holders who will be able to avoid $120 in additional fees over the course of a year, it still leaves many cardholders struggling with the new repayment terms on balances they thought would remain at a low rate of interest.
Chase is also allowing for the minimum payment to drop back to the original percentage (2% of the balance for most cardholders) instead of the 5% minimum payment requirement. However, some cardholders fell behind as a result of the higher payment requirements and have since incurred additional late and/or over-the-limit fees.
Consumer resistance to the changes in terms was fierce, and much of the ire was placed on the $10 monthly service fee. This was the basis of a class action lawsuit that were gaining momentum as well as potential regulatory challenges.
New York Attorney General Mario Cuomo announced the agreement with Chase which will end the unpopular practice and result in $4.4 million in refunds to affected cardholders. This is part of Cuomo’s response:
My office will not sit back and allow banks to promise one thing in its solicitations and agreements with consumers, and then when times get tough, change the deal, leaving consumers holding the bag.
Several cardholders have already reported receiving refunds for fees they had already been charged.
This entry was posted on Wednesday, April 1st, 2009 at 1:20 pm and is filed under Consumer Protection, Credit Cards, Credit Cards: Chase, Financial News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
April 30th, 2009 at 6:24 am
This part of your report is not really true: “Chase is also allowing for the minimum payment to drop back to the original percentage (2% of the balance for most cardholders) instead of the 5% minimum payment requirement. ”
CHASE is only allowing the minimum payment to drop back to 2% of the balance if you agree to have your interest rate more than doubled! AND Chase is providing no opt-out provision. This continues to be an outrage!! These customers are receiving interest rates of 2.99 – 3.99%, so they obviously are excellent customers, paying their bills on time. They just are no longer profitable to Chase.
June 23rd, 2009 at 11:57 am
[...] like much for cardholders that carry high balances, an additional $120 a year in fees does add up. (Chase refunded these fees in March 2009 and has discontinued the [...]