Chase No Longer Increases Rates Based on Credit-Bureau Information

Chase is no longer increasing the rates of cardmembers based on their credit-bureau information as of March 1, 2008.

Consumer advocates have long decried the controversial industry practice commonly known as universal default, under which a customer’s rate could be automatically raised based on a single late payment to another creditor. And, although Chase ceased practicing universal default in 2005, Chase is now going further by completely eliminating rate increases based on credit-bureau information. This change is part of the continuing expansion of Chase's Clear & Simple initiative – an ongoing program to help Chase customers better understand and manage their account.

Effective March 1st, 2008, Chase may raise a customer’s interest rate if they violate the terms of the cardmember agreement by making a late payment, exceeding their credit limit or paying with insufficient funds. However, if a customer’s rate is increased for any of these reasons, Chase offers cardholders a way to lower their interest rate through its “rate reset” option: If a customer signs up for automatic payments and makes on-time payments for 12 consecutive months, Chase will reset the customer's rate to the lower, original non-promotional rate.

I commend Chase for being serious about making their cards more consumer friendly. Given the intense political and media spotlight on the card industry this year, Chase has really raised the bar with this announcement (Citibank is the only other issuer that I'm aware of that has made a similar announcement- they announced earlier this year that they would be eliminating “any time for any reason” increases to the rates and fees of their customers’ accounts). Let's hope that other issuers follow Chase's lead!

Please  let us know your thoughts about this exciting development!

Curtis Arnold - Curtis is the CEO/Founder of CardRatings.com, a website that provides credit card ratings and reviews of over 20,000 offers.

Comments

[Jennifer]

I found this article interesting, because I just found out that Chase did just raise my interest rate, by 12.5%, going from 15.49 percent to 27.99%!! I was randomly checking our interest rates on all our cards, and was shocked to see what Chase had done. I've had the card for 2 1/2 years and I have never been late, never been over my credit limit and have always paid more than minimum - many times paying my balance in full. I thought that meant that I was a good customer, but apparently I was sadly mistaken. It seems that my crime was having an unexpected emergency, that has put me close to my credit limit - not there, and not over, but close. And though that is obviously temporary, that has put me with those that are deemed worthy of a 12.5% interest rate. The worst part is that this information was never disclosed to me - Chase says they sent me notice of this change (which took place in mid-February) in "12/2007" but I received nothing. And they will do nothing about it. So, while this article sounds great, I wonder how many there are like me out there, who Chase quietly hijacked while making this grand announcement?

[Jason Foster]

Hi,

This sounds good to me. I received a rate increase notice from Chase in Nov. 2007 for a visa card with 9.5% fixed rate. The rate increase was to 21%. Didn't make any sense to me, I still had 750+ credit. I declined the increase, and they said they would close my account and let me pay it off at the fixed rate. Now here's the weird thing: In my February statement, Chase lowered my interest rate to 7.5% fixed. What in the world are they smoking over there?!? It's really confusing being a Chase customer, IMHO, although I'm glad about the lowered rate...

[Jason Foster]

Btw, Jennifer, I feel for you. I was quite upset when they tried to jack my rate up with their letter. I can understand that such a letter could have been missed in the shuffle of daily life, and that is really unfair of them. It pissed me off at the time. I'm over it now, and with the latest announcements by Chase I might return as a customer, but I'll probably wait a few years and see how things go.

[Chuck Ray]

Interesting. They just hiked my rate even though I closed my account and opted out of their intended APR increase back in 2005. Not sure why it was raised but they said there is nothing they can do about it... never been late with a payment and my credit score is above 800... interesting.