Chase Raises Interest Rate On Closed Account

David closed his Chase credit card account instead of accepting a rate increase earlier this year. That should have been the end of it, but it turned out Chase later went ahead and increased the interest rate anyway.

He writes,

We had a business credit card account with Chase and earlier this year they sent us a notification that they would be doubling our interest rate. I called them and we opted to close the account rather than pay the higher interest rate. After that we have been steadily paying off the balance but the interest rate is still fairly decent so we’re paying off other, higher interest rate loans first.

I hadn’t been checking the statements closely because they are set up to auto-pay and the account is closed so there should be no new charges or changes, right? Well, I went back over the statements the other day and discovered that they had boosted our interest rate after the account had been closed. I called Chase, explained the situation and they told me that they will still retain the option to raise interest rates and that we would have to opt out of any interest rate increases they notify us about. I think they know this is not completely on the up-and-up as it was pretty easy to get the agent to undo the interest rate increase and process a refund for the extra interest that had been charged. The situation makes very little sense as we already opted to close the account rather than pay additional interest and there’s nothing we need to do at this point other than to say “No”. I think they’re counting on people not watching these closed accounts carefully.

Moral of the story is to be aware of this practice and watch out for credit card companies to attempt to slip in changes and extra fees/interest on accounts that have already been closed.

(Photo: TheTruthAbout…)

Comments

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  1. Fabuloso says:

    Thats what you get for having auto-pay and not looking at what your paying.

    • MauriceCallidice says:

      @BB_User: Way to blame the OP.

    • AnxiousDemographic says:

      @BB_User: Snarky and completely missing the point.

      I appreciate the warning the OP is giving us.

    • Shadowfire says:

      @BB_User: I think what you meant to say was:

      Thts wht y gt fr hvng t-py nd nt lkng t wht yr pyng.

    • TheFingerOfGod says:

      @BB_User:

      This same exact thing happened to me. I don’t use auto pay and so I caught it more quickly but was told that they reserve the right to jack up the rate anyway. They initially wanted to raise the rate from 7.99% to something like 22%. I canceled the account and thought I would stay at 7.99%. Months later they jacked it up to 11.xx%. Perhaps I should have freaked out and demanded that they lower it back to 7.99%. If I did as the person in the article did perhaps it would not be at its current 11.xx%. This whole thing has been a huge wake up call for me and many consumers of credit. Speaking of which. . . I need to check to see that the rate has not gone up further!!!!!

  2. cash_da_pibble says:

    Since the OP HAS a balance with them, they technically HAVE an account, right?
    I always thought “Closing an Account” requires you to pay the balance in full to confirm termination.

    Since there’s a balance, there’s technically an account-whether they use it or not.

    • Nytmare says:

      @cash_da_pibble: But changing the interest rate on an existing loan balance is sleazy, and should not take effect if you state that you choose to stop doing business with them, pending payoff of the balance.

    • metsarethe... says:

      @cash_da_pibble: yes you can close an acct by not accepting interest rate hike and pay off current balance at the original interest rate.

      That being said Chase took care of the situation and while i think one has to be more vigilante about statements when auto pay is enabled

      • floraposte says:

        @metsarethe…: Until that provision of the Card Act goes into force, there’s nothing requiring the bank to let you pay off the balance at the old interest rate. If they want to hike the interest, they get to. It’s so absurd that they can that many people believe it’s not allowed, but it is.

        • bwcbwc says:

          @floraposte: The other thing that could have been going on is that even if you tell them you are closing and you don’t accept, if you add any new charges (e.g., autopays to other services) after that notification, it cancels the closure and they assume you are accepting the terms.

          The other thing that happens is that they usually require the non-acceptance notice to be sent to them in writing, so calling the CSR may not cut it as “official notification”.

    • wee_willie says:

      @cash_da_pibble: I don’t have an account, according to my statements from Chase. There is a notation on the statement that the account is closed.

  3. wcnghj says:

    Time to opt-out again…

  4. soapdish says:

    Chase is trying that sort of crap on us right now. Received letter indicating rate will be increased from 7.24 fixed to Prime + 8.99 unless we call or write by July 22. We call July 20 and ask them to keep the rate the same. They declined, we told them to close the account. We receive our statement in September and they went ahead and changed the rate anyway. We contacted them to indicate their mistake and they changed the rate back, indicating we should see the change in the next billing cycle. In October we receive our statement and yes, they had changed the rate back, but they hadn’t credited us the difference if they had kept the rate where it should have been. Last week we contacted them to go back and make the changes to each statement based on what the balance should have been on what the rate should have been. They declined to make the change despite repeatedly explaining to them that they were in clear violation of the written agreement that they had sent.

  5. There's room to move as a fry cook says:

    Earlier this year BofA (credit card) gave me the option to A) accept an increase to 28% interest or B) keep my 12% rate if I didn’t use the card. I chose option 2, have not used the card and am decreasing my balance.

    Today they told me, on the phone, that I can still make purchases and keep my 12% rate. I don’t trust them.

    • steads says:

      @IfThenElvis: (from an insider) certain individuals who were sent the letter of increase and opted out. Therefore- if that person opted out of the increase they stopped using their cards, because if a new charge posts to the acct it would “debit ratify” the acct and increase the interest.

      It was later determined that certain accts were not as great a credit risk and should not have been included in the initial repricing. So… SOME individuals who opted out of the rate increase can still actively charge on their cards without debit ratifying and increasing their interest.

      These individuals were not notified of the change because it was a positive change (BAU)… but there is still some risk to be considered on these accts.

  6. PLATTWORX says:

    1. What Chase did should be illegal. The account is closed, you don’t get to jack up the rate after to see if you can get a few more bucks from a “former” customer.

    2. The OP logic makes sense, but to not spot this the section it happened is an issue. Also, the amount of debt he mentions paying off before Chase makes me think his business is not doing very well.

  7. Mr.Duke says:

    Companies are probably counting on a high percentage of knuckleheads not reading or understanding their statements.

  8. zcb says:

    Several mistakes here. First, never ever have auto pay. When the account is closed the auto pay lives on. Next, look at your statements. Don’t trust anyone. Finally, if you say you are going to close your account….close it. Any balance due can technically receive a higher rate. It’s not really closed until there is a zero balance. I find it mind numbing that the credit card companies are still allowed to ply their disgusting loan shark practices.

  9. QquegChristian says:

    Citi Bank just did this to me on an account that I had already opted out of a rate increase on. They notified me that they were raising the rate unless I opt out… again.

    I’m lucky I caught it this time. The first time they did it, they sent a dedicated letter in the mail to inform me… this time, they just added it on to my “paperless” statement online, in a little box at the bottom of the statement that looked like an ad that my brain is programmed to no longer look at.

    They should not be allowed to increase the rate without a dedicated letter, call, or at least email.

    You can blame people for not reading the statement, but when you sign in you can clearly see your account activity and if it is correct. Statements are obsolete to the searchable web databases of account activity, but apparently they are good for hiding extremely important changes to your account.

  10. wee_willie says:

    I read my statements every month, and Chase has tried to pull this on me. I closed my business account earlier this year to avoid a doubling of my interest rate. The next statement they sent had the increased rate on it, so I called, they apologized and the next month, I received credit for the oversight. In July I again received notice that they were going to raise the interest. I called, and the csr told me the increase didn’t apply to me since my account was closed. My October statement had the higher interest rate, so I called Chase again. The next day, I received a letter from them telling me how sorry they were I was closing my account! The day after that, I got a card from them telling me they were looking into the problem. My November bill arrived with the same high rate, so I called Chase again. The csr said I had needed to opt out the second time after I got the July letter. I told him I had opted out then. I was extremely angry, to say the least, and I told him they could either drop my rate back and get the interest I also owed, or they’d not get anything but the money I owed, without the interest. I know it will lower my credit score, and some would caution that even if I pay what I owe, without paying the interest it would still be a black mark on my credit. A few would say since this is the case, why should I bother paying at all, but I owe the money so I’ll pay it back. If I knew how they figure interest I’d also pay that back, but I don’t so I can’t.

  11. econobiker says:

    Sorry, but I am blaming the op here:

    “We had a business credit card account with Chase and earlier this year they sent us a notification that they would be doubling our interest rate. I called them and we opted to close the account rather than pay the higher interest rate.”

    Typically an account is not truely closed until you send a paper letter to some obscure Utah address specifically demanding that the account be closed and with a copy of the notification included. And make sure you send it certified with return receipt since there is potential that the credit card company may lose your letter in the future. Phone calls just do not get it documented.

    • webweazel says:

      @econobiker: You’re right. You have to answer their rate hike notification with a letter. Send one right away when you get the notification, send another two weeks later, and call them about two weeks before the deadline to make sure your denial letter has been entered into your account details correctly. CYA.

  12. mwc5446 says:

    I don’t understand all these reported increases. I just received my cash advance checks from Chase offering .99% until May or 4.99% fixed until paid off.

  13. GMFish says:

    @Ursus Maritimus: Exactly, let’s live in a cut-throat dog-eat-dog world where it’s perfectly acceptable to rip someone off as long as you don’t get caught. And even if you do get caught, it’s still the other guy’s fault for not catching you sooner.

    By the way, could you please post your home address? Thanks. I need some furniture and if your windows are not strong enough to stop the brick I throw at them to gain access to your house, that’s your fault, right?

  14. wallspray says:

    @GMFish: this response wins.

  15. YouDidWhatNow? says:

    @GMFish: @wallspray:

    Yes. You, sir, win the internet. Congratulations!

  16. Liam Kinkaid says:

    @GMFish: On the other hand, how much responsibility can you disclaim if someone, on multiple occasions, charges you for something at a higher rate than you figured it would be and you continue to pay it? I’m not totally blaming the OP because raising an interest rate after an account is closed is very sleazy. But this site is “The Consumerist”, and one of the major tenets is to either mistrust businesses or, at the very least, “trust, yet verify.”

  17. TechnoDestructo says:

    @MauriceCallidice:

    There is no such thing as a bank error.

    There is malice behind every “error.”

  18. jafi says:

    @MauriceCallidice:

    I had a similar problem with Citi. I hadn’t used the card in over a year so they closed my online account access. I went to pay the bill. Had to set up the account all over again. Since I wasn’t home – by the time I got home and set up, I was 2 hours “late” in paying the bill.

    Late fee and interest (the $120 balance paid in full). Appealed the late fee. Told approved, then got a denial letter that advised me I should mail my payment well ahead of time to ensure it arrives before the deadline. WTF?
    Went on line immediately – deadline had passed – second late fee and more interest.

    Called Citi to close account. Now all of a sudden all late fees refunded. But still ended up owing 59 cents in interest. Which was overdue – because of their screwups. I decided rather than screwing with it further to just pay the 59 cents. (This had been going on for almost 4 months at this point).

    Went to pay the 59cents. Had to go through this unbelievably inane process to submit the payment in full for 59 cents. “we notice you’re paying late choose from the following reasons why”. There was no other option – just : forgot, natural disaster, etc. I had to pick one to submit the payment – so I picked natural disaster.

    “When will you be able to start paying your overdue balance?” Not in the options – paying in full now. So I picked 5 years out.

    Where will the money come from? I think I picked insurance over inheritance.

    etc.

    It was the most bizarre thing I’d ever encountered. I was paying in full and the amount was under a dollar. I’m just waiting for Citi to notify me in the future that I’ve reached the date where I can begin paying them again.

    And now Citi is talking about charging “freeloader” an annual fee because they only make the percentage they charge to merchant off of those of us who don’t carry balances.

    I’ll cancel. I have enough other cards that don’t plan to charge that I don’t need citi cards.