Customers of JPMorgan aren’t too happy after learning that their minimum monthly credit card payment will be increasing. Effective in August of this year, the biggest U.S. credit-card issuer will be raising minimum payments on balances from 2% to 5% for select customers. That’s a pretty major increase, right?
Well, that’s not the only increase customers have to worry about. In addition to the minimum-balance increase, some customers will also have to contend with an increase in balance-transfer fees, which will adjust from 3% to 5% in August.
So you’re probably wondering just who will be affected by these increases.
Well, so far, it’s not entirely clear. According to a representative from the company, customers who have carried balances are chosen by the way they have used and maintained their accounts. But JPMorgan states that this adjustment will only affect less than 1% of the 159 million cards in circulation.
JPMorgan is not the only company that has chosen to increase rates, however. Recently, Citigroup Inc. increased rates on 15 million credit card accounts, including those tied to Macy’s Inc., Sears Holdings Corp., as well as other retailers.
Why the Rate Increase?
The rumor mill is stating that many credit card companies are raising their fees because of the new law signed by President Obama on May 22nd. According to this law, card issuers will be forced to restrict interest-rate increases and penalties to protect customers from unfair practices. Since the law doesn’t take effect until August 20th, credit card issuers are taking their grace period as an opportunity to curtail credit, push up fees and restrict awards.
According to credit card companies, a few other reasons for the increase include the higher cost of doing business in the industry, as well as adjustments inherent in regular account reviews. Also, companies feel that too many credit cards were given to those who shouldn’t have been approved.
With all of the adjustments, customers will have to work through another challenging period of increased costs and all of the repercussions that potential default can bring with it.
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