Wow, so you must know the OP's situation really well huh?

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.

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.

@B: it's 5.9% as noted in the story

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.

@Joshua Willis: me thinks someone is a Chase fanboy?

@B:
5.9% fixed, you'd know if you read more than the headline.

@Joshua Willis:

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.

Got the same letter from Chase. Gonna suck it up, pay it off (3.99promo baby!) and go with a credit union.

@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.

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?

@Rectilinear Propagation: +1 internets

@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.

@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.

@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.

@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.

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).

@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.

@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?

@Rectilinear Propagation: Oh my...you deserve another star.

@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.

The numbers don't make sense:

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

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.

@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.

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.

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?

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.

@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!

@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.

@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.

@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.

@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%!

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.

@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.

@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.

@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?

@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."

@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?

@kiltman: Go Credit Unions!

@SkokieGuy: not = now

@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.

@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?

@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?

@Rectilinear Propagation: This is excellent. You get a red heart, since you already have a gold star. :)

@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.

@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.

@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.

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.