June 30, 2009
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News: JPMorgan Raises Minimum Monthly Payment
It's just another attempt by JP Morgan Chase to regroup some of its credit card default losses by squeezing its current customers. The largest U.S. credit card issuer announced it will be raising its monthly minimum payment due to 5% from a previous 2%. It looks like the lender is scrambling to implement as many unfair practices as possible before the new federal law goes into effect. In a recent notice mailed out to its customers, Chase announced the increase that is scheduled to begin in August of this year. Of course, for any customer that is late or pays less than the 5% minimum there will be an additional assessed fee. JPMorgan recently announced its move to increase balance transfer fees from 3% to 5% as well changing the fixed interest rate to a variable rate. According to Chase, the new minimum affects only a select group of credit card accounts that are carrying balances forward. The lender has approximately 159 million cards currently in circulation.
The banks says the increases are necessary in the wake of new federal regulation that will inhibit credit card lenders from managing business adequately to meet the demands of consumer credit. The new legislation, the Credit Card Accountability Responsibility and Disclosure Act becomes effective August 20th and requires notices such as the last two made by Chase be sent to customers at least 45 days in advance. JPMorgan CEO Jamie Dimon had indicated in a statement after the signing of the new legislation by President Obama that the new law will cost Chase $500 million in lost fees and interest.
Experts say that the credit card business is the most lucrative in the financial industry and continues to post returns that outmatch any other business in their portfolios. Stocks of card issuing banks have nearly tripled in the second quarter despite the challenges of a weak economy. Earnings are expected to continue to be fruitful even in the wake of the new federal law.