banktime.com

In today’s America, vast numbers of consumers are having a hard time meeting the minimum payment on their credit cards, let alone forking over any more on a monthly basis. For those living hand-to-mouth after being laid off, taking a demotion or pay cut to avoid losing their jobs, or just coping with the ever-increasing cost of living, that monthly minimum on their statement is a tough amount to come up with. The concept of it being raised is unthinkable. Yet, that’s exactly what many Chase cardholders will be contending with, come August. The largest credit card issuer in the United States announced yesterday that it will be jacking up the minimum monthly payment on certain consumer credit card amounts in advance of approved legislation which will make unwarranted APR changes illegal. These unlucky consumers will see their minimums raised from two percent to five percent. To put that in perspective, consumers with an eight thousand dollar balance will see their minimum each month climb from one hundred sixty to four hundred dollars – an increase of one hundred fifty percent.

Chase customers are receiving the notices now, which gives them precious little warning. Those cardholders who fail to meet the new minimum payments will be penalized with extra fees, Chase warned. The card issuer is not offering an “opt out” option. Chase stated that the change affects about one percent of its customer base, which encompasses some one hundred sixty million cards currently in circulation throughout the United States. The cardholders affected by the new minimums will be those considered “high risk,” who have been less than diligent about paying their account scrupulously in the past… in other words, those who can least afford to have extra payments forced upon them. The announcement of the increased minimum payments is the second rate hike by Chase this month. At the beginning of June, it announced that the charge for balance transfers will also be increased to five percent.

Chase’s actions are indicative of the preemptive strike on American consumers that card companies are waging in the wake of the Credit Cardholders’ Bill of Rights being signed into law by President Barack Obama back in May. The law, when it takes effect early next year, will prohibit plastic merchants from engaging in long-standing industry practices that have long been derided by consumer advocates: raising interest rates unilaterally, extending accounts to college students, and burying important card terms and conditions in microscopic fine print. Card companies warned that consumers would pay a toll for the new protections – less availability of credit, higher penalties, and punier rewards. The effects are already being felt, as card companies rush to make changes and modifications to their accounts before being restrained by Congress.

Citigroup, for example, has already cranked up the rates on fifteen million credit cards it issued through retail store brands like Macy’s and Sears. A representative of Chase groused that the company is expecting to lose hundreds of millions of dollars from the new rules, in addition to the vast sums of money it has already lost during the recession. Personally, I think it’s a little ridiculous for credit card companies to expect any of us to feel badly for them… but that’s just me.