Syracuse (WSYR-TV) - Credit card companies are at it again, raising interest rates on existing balances. A law has been passed to prevent it but it doesn't go into effect until February of 2010.
Wednesday, Senator Chuck Schumer asked the Federal Reserve to freeze interest rates right now, but as we've been reporting it's still too late for many of us. Skyrocketing interest rates aren't the only thing we need to worry about: Some Chase customers are seeing their payments double for another reason.
A few years ago, Curt Parry was outgrowing the space he used as a personal trainer, so when he got an offer from Chase Bank for a fixed 3.99-percent interest rate on his credit card, he decided to take out about $30,000 and make some changes.
Curt used almost all of that money to re-invest in his business and buy new machines and open up a new studio.
“Pay it off in four years at 3.99 percent -- better than any home equity loan, better than any business loan I could get,” Parry says.
The problem is, Chase is now changing the terms. He's allowed to keep the low interest rate, but his minimum payment is jumping from two to five percent of the balance, or from $400 a month to just over $1,000.
It's not just small business owners like curt who are affected, either. People who consolidated loans onto low-interest Chase cards are also being hit.
“They've targeted people with high FICO scores, they're not going to give that deal to you unless you're a good customer, so they're going after the good customers, and now that the deal is no longer good for them, they're kind of changing the rules,” says Parry.
“It almost seems that they have a whole department to try and find ways to get around the rules and you have no recourse,” he says.
His only choice now is to pay off his balance, which is less than $20,000, and go elsewhere for his credit needs.
“I'll never use Chase again -- no way,” Parry says.
These increases aren't specific to Chase; virtually all of the big guys are doing it, including Capital One and Bank of America.
If you haven't seen an interest rate increase or a minimum payment increase yet, don't assume you're in the clear. These card companies are trying to sneak them in while they can, before it'll be against the law in February.
