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Chase is Making Me an Offer. Either Pay More Each Month or Pay More. – Sheri

Sheri

“Dear Steve,

My Chase credit card balance is approx $3,500. Most of the balance is 4.99% for life of loan. I haev automatic deduction for minimum payment (2%). They are increasing my minimum payment to 5% which I cannot budget for. Can they do this legally? They offered to keep the payment near $70 but increase my interest rate.

Can they increase my minimum premium? The only reason they are doing it is because of the low interest rate.

Sheri”

Dear Sheri,

I am afraid that under current law, as long as they give you at least 15 days notice, they can change the terms.

One option would be to say that you refuse the new terms and would like your account closed under the old terms and pay it off that way. The bad thing about that approach is that it will end the benefit the Chase card provides to your credit score and may lower your credit score.

Obviously Chase would either like to have more of your money faster, or less of your money each month for a longer period of time and at a higher rate of interest. Of course if you elect for the higher minimum payment and another creditor does the same thing you could find yourself in a situation where you might default on your debts and then have the rates raised to the maximum penalty interest rate.

This is a classic example of the Golden Rule – He who has the gold, rules.

Under new credit card rules yet to go into effect the limits would be:

Existing balances: Issuers cannot retroactively change the rate on an existing balance unless the account is 60 days delinquent.

Payments: A consumer payment above the minimum applies first to the balance with the highest rate.

Teaser rates: Issuers cannot raise rates for the first year after an account opened. Promotional rates must last at least six months.

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Bills: Issuers must send a bill 21 days before the due date.

Over limit: Issuers cannot charge over-limit fees on credit cards unless the consumer has signed up to allow such transactions.

Minors: For consumers under 21 years old, a company must get the signature of a parent or another to take responsibility for the debt, or it must obtain proof that the under-21 consumer can repay credit.

Disclosure: Cardholders must get 45 days notice of change in terms.

Fees: Issuers cannot charge fees to pay by mail, phone, and electronic transfer or online, except for expedited service.

Gift cards: All gift cards must have at least a five-year life.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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