Rate-jacking coming to an end???

stargazer0725 · 11-20-2007, 04:13 PM

Did anyone else see this press release from Chase?

Press Releases

Does this mean what I think it means?

Qtip · 11-20-2007, 04:35 PM

Interesting, It is not clear on the article whether or not they will stop the practice altogether. I think it would make business sense to do so, I have in the past canceled cards due to rate jacking,.

Enigma · 11-20-2007, 10:37 PM

I see two reasons for the move; 1) our congress critters are taking notice and it is always good to be an early adopter, 2) it was probably hurting profits. Rate jack a consumer to the point where they cannot or will not make payments and walk away from the debt, or the consumer pays the card off and closes the account, thereby losing market share.

roybean · 11-20-2007, 10:56 PM

With all of the news about debts and subprime lending being in trouble, maybe it's a good idea.

Hedwig · 11-21-2007, 12:41 AM

It sounds to me like they are following BoA's lead. Several years ago, BoA stopped rate jacking because you were late on another account at another bank. They will, however, raise rates on an account if that account is late. I think it said two times within a year late and they can increase to the default rate.

Notice Chase said they wouldn't increase rates based on info from the credit bureaus. To me, that means they'll still increase if you're late on an account with them.

stargazer0725 · 11-21-2007, 11:41 AM

You know, I don't so much mind them increasing your rate if you're late with them...you've technically broken your commitment to them. However, rate-jacking someone just because they have a high utilization is @sinine. It does nothing but cause people to completely default (or take their business elsewhere if they're lucky enough to have the opportunity).

I know, people shouldn't heavily utilize their available credit, but if a person can manage the timely payments as contracted, they shouldn't be penalized for using it.

Hedwig · 11-21-2007, 03:11 PM

I agree, stargazer. I mean, sometimes you have a crisis. Maybe a job loss, or an accident causing some large bills, or a flood or hurricane or something.

The reason you should have large limits is for emergencies. If you can keep up the payments, then you haven't broken your agreement. You may know that the situation is temporary and in a few months or a year you'll have the money to pay it all off. As long as you're managing your payments, so what.

flicks · 11-22-2007, 01:58 AM

Quote:

Originally Posted by Hedwig

It sounds to me like they are following BoA's lead. Several years ago, BoA stopped rate jacking because you were late on another account at another bank. They will, however, raise rates on an account if that account is late. I think it said two times within a year late and they can increase to the default rate.

Rate jacking is not the absolute worst a bank could do to you. The following story is based on true events: A friend with a $40,000 BoA card, a $5000 Chase card and an Auto Loan buys a $38,000 item with the BoA card (11.4% made sense.) Three months later, BoA closes the account and invokes the high balances versus credit limit BS. Called them up only to find out that he's welcome to apply for another card...

Quote:

Originally Posted by Hedwig

Notice Chase said they wouldn't increase rates based on info from the credit bureaus. To me, that means they'll still increase if you're late on an account with them.

Same friend, pays off the Chase card after carrying a good balance through the introductory period and making minumum payments. Next letter from Chase is a notice about his new credit limit: $1,000.

This all reminds me of Al Pacino in "The Devil's Advocate": Look, but don't touch... Touch, but don't taste... Taste, but don't swallow...