Credit card defaults have risen sharply as the unemployment rate swells, raising the concerns about billions more in loan losses. JPMorgan Chase is one of several major credit card issuers who have added fees, cut credit limits, raised interest rates and changed terms to help manage riskier cardholder accounts. Nearly 400,000 Chase customers were notified in January that they would be charged a $10-a-month maintenance fee to keep their account open. Adding insult to injury, Chase raised the minimum payment from 2% to 5% for those same customers who were carrying an outstanding balance.
Reflecting the struggle that credit card issuers are experiencing with risky borrowers, the controversial maintenance fee will be refunded to JPMorgan Chase & Co. low-APR credit card customers. According to a company spokeswoman, the company will refund any maintenance fees collected so far and discontinue charging the fee. However, the minimum payment due will remain at 5% of the account balance. The move follows a deluge of complaints, particularly as banks face growing public backlash over the U.S government’s billion dollar rescue of the financial sector, which was intended to increase lending and jumpstart the economy. In October, JPMorgan accepted $25 billion from the U.S. government.
“Beginning in April, Chase will stop charging the $10 monthly service charge and credit the service charges billed to date,” said spokeswoman, Stephanie Jacobson, Vice President of Public Affairs for Chase. The fees applied to “less than one-half of one percent of our customers,” Jacobson said. She also noted that the accounts in question were promotional low-interest rate accounts of customers making little progress in paying down the debt. “Our desire is to have these balances paid back in a reasonable period of time,” Jacobson said. “The minimum payment due will remain the 5% of their new balance.”
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