Chalk one up for David Hannah of St. Petersburg and his fellow credit card holders across the country who are battling new and higher fees.
Amid consumer outrage, JPMorgan Chase has backed off a controversial $10 monthly charge that it had tacked on to some long-standing accounts in which consumers had been making minimum payments on a large balance. The megabank also is refunding about $4.4 million that it had collected through the fees so far this year.
"We have not seen too many instances of banks backing off of a charge. This is fairly unusual," said Bill Hardekopf, who runs the credit card information Web site LowCards.com.
Then again, Hardekopf didn't seem too surprised given the outrage factor. "Chase really angered its cardholders, and they loudly objected," he said. "This was essentially a $120 annual fee and a terrible deal for consumers."
At the same time as it imposed the $10 fee, Chase boosted minimum monthly payments for some of the same customers from 2 percent to 5 percent of the balance.
Hannah, a St. Petersburg resident hammered by the higher fee, considered Chase's retreat a partial victory.
Eliminating the $10 fee is good, he said, "but what I was really upset about is, if people are paying their bills on time, they're still yanking up their interest rates." For him, raising the minimum payment to 5 percent hiked his monthly bill from $195 in January to $480 in February.
Many credit card issuers have been aggressively raising their rates, both to weed out potential problem customers and shore up their operations. Late payments on U.S. credit cards recently reached record levels with defaults rising sharply as well.
Fees hop up faster than fleas
JPMorgan Chase may have backed off from one controversial credit card fee, but there have been a spate of other recent changes by card issuers that aren't too popular with consumers. Here's a partial sampling compiled by the Web site LowCards.com:
• Capital One increased the rates for new customers on 15 cards. The rate for the Platinum Prestige card rose from 7.15 percent to 11.9 percent and the rate for the No Hassle Points card (excellent credit) from 8.15 percent to 13.9 percent.
• Citi changed its ThankYou reward structure on March 1. Previously, cardholders could redeem 20,000 Thank You points for any domestic flight up to $400 in value. In March, the formula changed to 100 points per $1 charged. You now have to redeem 40,000 points for a $400 flight.
• Bank of America and Citi began charging a 3 percent fee for all transactions made outside the United States in U.S. dollars. The fee previously was not added when foreign transactions were made in U.S. dollars.
• Starting May 1, Discover will charge a 2 percent foreign currency transaction fee.