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Chase plans higher balance transfer fee for some


Wal-Mart.com USA, LLCchase_logoThe Associated Press June 24, 2009, 6:26PM ET

By CHIP CUTTER

NEW YORK

Consumers looking to transfer credit card balances to a JP Morgan Chase card may face higher costs in the future, as a result of a new fee plan disclosed Wednesday.

JP Morgan Chase plans to increase the maximum balance transfer fee on some its cards to 5 percent from the current rate of 3 percent, effective in August, said Stephanie Jacobson, first vice president of public affairs.

She declined to disclose how many customers would be affected by the decision.

The hike means some Chase cards now come with the highest balance transfer fees in the industry, said Ruth Susswein, a spokeswoman and deputy director of national priorities for Consumer Action.

“It’s competitive in the wrong way,” she said.

In an e-mailed statement, Jacobson said the majority of Chase customers rarely transfer balances. The latest decision provides the company with “greater flexibility” to make offers that are attractive to customers and prudent to the bank, she wrote.

“In a higher loss environment, it’s important that we are prudent with our balance transfer offers,” she said in the statement. “As a result, we are making fewer balance transfer offers and targeting them to selected customers, primarily those that choose to engage in spending with us on their card.”

The move comes a month after Congress approved a new credit card bill designed to make it easier for consumers to avoid hidden fees and other charges. The new regulations prevent credit card companies from abruptly adjusting an individual’s interest rates and other terms.

Susswein said many card issuers will be squeezed by the legislation, and are now raising their rates and fees before it takes effect in February.

“I think it’s not a surprise that lenders are looking for every which way to raise rates and raise fees before they can no longer do it on a whim,” she said.

Jacobson declined to comment on whether the fee increase is tied to the new bill.

Bank of America hiked its balance transfer fees to 4 percent earlier this year, sparking consumer criticism, said Ben Woolsey, director of marketing and consumer research at CreditCards.com

The Chase decision may simply signal that the company wants to avoid balance transfers, he said, as a growing number of consumers default on their credit card bills.

“The issuers in this environment don’t want to be the card of last resort where all the balances kind of land, then the card member defaults,” he said. “Until the loss situation settles down, they’re a little bit weary of balances being transferred.”

Chase currently has 159 million cards in circulation and is one the nation’s leading MasterCard and Visa issuers by number of cards, according to its latest quarterly report.

Shares of the company rose 2 cents to $33.48 in after-hours trading, after losing 11 cents to close at $33.46 in the regular session.

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