JP Morgan Chase Setting Up For Massive Credit Card Default Problem

[Aboushi]

Quote from pspr:

Chase Bank in recent years offered credit card holders guaranteed rate loans for as little as 2.99%. These loans were made with standard credit card minimum monthly payments of 2% of the balance. In the last couple months Chase has started notifying cardmembers who took these loans that their minimum montly payment is going from 2% to 5% regardless of their credit standing. The change is also non-negotiable.

This is the eqivilent of changing, for instance, a $500 minimum payment into a $1250 minimum payment. People cannot adjust to such huge unexpected changes in their budgets.

I expect this is going to make many of their cardholders default on their credit cards. I don't know if the purpose is for them to get out of the credit card business or not but this is going to push a lot of their cardholders into default.

If you cant pay 5% of what you owe on a credit card, then u shouldnt have a credit card

 

[ByLoSellHi]

Don't tell Bernanke or anyone at the fed (allegedly not a part of government, when sued under FOIA or other statues, but part of government, sort of, when seeking additional powers from Congress) or anyone in government that fractional banking is not sustainable - the very book that the federal reserve relies upon, 'Modern Money Mechanics,' pits our very future surivival on it.

 

[huh]

Quote from pspr:

Chase Bank in recent years offered credit card holders guaranteed rate loans for as little as 2.99%. These loans were made with standard credit card minimum monthly payments of 2% of the balance. In the last couple months Chase has started notifying cardmembers who took these loans that their minimum montly payment is going from 2% to 5% regardless of their credit standing. The change is also non-negotiable.

This is the eqivilent of changing, for instance, a $500 minimum payment into a $1250 minimum payment. People cannot adjust to such huge unexpected changes in their budgets.

I expect this is going to make many of their cardholders default on their credit cards. I don't know if the purpose is for them to get out of the credit card business or not but this is going to push a lot of their cardholders into default.

Yup got my letter informing me that they are raising my minimum payment to 5% on Monday starting in August. My payment is going from $352 to $880 to which my response is....who cares! Besides, every month your minimum payment drops as the debt goes down. I would assume that anybody that took out $25K+ in credit card debt somewhat knew what they were doing and had planned for this so I would hardly qualify this as a "Massive Credit Card Default Problem"......unless they work in the banking industry then all bets are off.

 

[pspr]

Quote from Aboushi:

If you cant pay 5% of what you owe on a credit card, then u shouldnt have a credit card

That's not the point.

Chase mailed offers to their good standing card holders offering balance transfers and outright loans at a "life of loan" low interest rate. The minimum payment was 2%. They didn't tell people they may increase the minimum payment substantially at their discression.

So, people thought they had a fixed loan with a fixed payment. Now they have an unexpected increase in their loan payment to 250% of their thought to be permanent payment. That takes a $500 monthly loan payment to $1250 monthly without recourse and little notice. Under any other loan contract that would be fraudulent.

They also tried to add a $10 monthly fee ($120 annually) to those loans but dropped it because they were sued because it was against state and federal laws. There is an ongoing class action suit over the increased minimum payment, too.

(I'm not a lawyer but I've personally beaten some shyster lawyers in court a few times in my life)

To: huh,

You and I can afford an unexpected increase of a few hundred dollars but a lot of people can't. What Chase is trying to do is to cause many of these people who can't to miss or be late on a payment so they can take that low interest rate up to 21% or 29%.

Chase also sent out some letters to people saying they can keep their 2% minimum payment if they would accept a higher interest rate. Otherwise, it was going to a 5% minimum payment. I beleive that is legally called extortion.

 

[IanMacQuaide]

Quote from the1:

I think you're missing the point. Consumers get into debt because of inflation and inflation is caused by the expanding money supply and part of that money supply is available credit. If you use no credit but 99% of your neighbors do then prices will still go up for you. Since wages do not keep up with inflation at some point you will be required to used debt because you run into some unexpected expense like a medical bill so even though you may be a conservative consumer who lives within his/her means you may still end up in debt because of reasons beyond your control. Not all consumers who run into money trouble do so because of the Benz in the driveway. Often times it's to buy asthma inhalers or insulin.

Bingo!
Anecdotally, I personally witnessed a federal magistrate counsel a poor elderly couple who were filing Bktcy due to medical bills.
She (da judge) was visibly moved by their plight, and took the time to give them contact info for free legal assistance.