Sunday, July 22, 2007

Chasing Chase

I took the day off on the Fourth of July. It was my first, or maybe second, day off in six months, and one result was that I forgot to pay a Chase credit card bill. When I realized my mistake, I paid the bill, one or two days late.

The penalty? A $39 late fee, of course, which I expected. But Chase also tripled our interest rate. The monthly payment we had been making no longer even covers the cost of the interest, and our payment went up about $150 a month.

This wasn't our first bad experience with Chase. The first credit card the Outpost ever got had a reasonable 13 percent interest rate. We had it for three or four years and never went over our credit limit and never, in my memory, made a late payment. Then Chase bought the company that issued the card. Almost immediately, our credit limit was reduced, and our interest rate went to 29.9 percent. Pleas for mercy were ignored.

Fortunately, we have other alternatives. We have paid off the business card, and we will be able to close out our personal account. But the incidents set several thoughts in motion:

1. Defenders of the free market may say we have other options and shouldn't do business with unscrupulous companies. But in neither case did we choose to do business with Chase. In both cases, it bought out more honest companies that we had been dealing with. People with fewer options than we have can easily get trapped by scoundrels through no fault of their own.

2. The idea that usury is a crime runs deep in the human psyche, well back to biblical times and probably much longer. Credit card companies test the public's tolerance of usury at their peril.

3. As a small business owner, I don't have to speculate about how I would react if a loyal customer occasionally made a payment a day or two late. I would say, as I have said many times, "Don't worry about it. Thanks for your business." Honest customers are too precious to throw away on a triviality.

4. Just from a business standpoint, it would be interesting to hear how Chase thinks that what it does makes sense. We have been good customers for years. They have made money off us every single month. Now, because of one payment two days late, they will never make another nickel off us. How does that make sense?

5. What they did isn't a crime, but the penalty would be smaller if it were. All things considered, it would have cost me less to go to Chase headquarters and punch the CEO in the nose. The law takes a dim view of misdemeanor assault, but it also understands that some people need punching.

6. Every couple of weeks, we get a "preferred customer" offer from Chase asking us to borrow more money at low rates, sometimes as low as 4 percent. When the next offer comes, should we take it?

UPDATE: This story curled my toes.


Jay Stevens said...

This stuff actually is quite common. In fact, if you miss a payment by a day or two, the rates on other cards often go up, too.

The best thing to do is simply not use a credit card for storing long-term debt. Always pay off the bill in its entirety every month. If you can't, you consider a bank loan to pay off the credit card debt now.

Vince said...

The way things are going, it's going to be more attractive getting loans in the pool hall from a loan shark. On the other hand, Polonius said,

Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

I beat allied interstate said...

For once I agree with Jay Stevens on something.

Not only are your other credit cards rates affected, but also your national credit score. Under the Chase section on your credit report (using Equifax as an example) there is a payment matrix representing up to 81 months of payment history. When you miss a payment or are late, the box for that month is RED. Get too many of those, and you won’t even get the bank loan Jay Stevens mentioned.

As for the political and philosophical elements in your complaint, all I can say is you’re a white male and over 21. You have no one to blame but yourself. Although, you can probably get some Democrat in Congress who will listen to your sob story.

PS: I love reading the Rip Off Report. Isn’t it great?

Anonymous said...

I am fortunate in that I don't carry credit card debt. But with Capitol One, I paid off a large amount and missed the amount owed by $.10. As a result I was hit with an interest charge the following month of $19.00. I called them, and believe it or not, the person I talked to refused to remove the interest charge. It took a long time and a trip of the ladder to get the charge removed.

Chase was trying to get in touch with my daughter to give her a credit card when she graduated from High School. I was answering the phone, and when I figured what they were up to, told them to stop calling at once. They refused. They said they would continue calling until they talked to her, and that I, as a parent, had no say in the matter.

I wrote to the president and CEO of of Chase and asked him for his daughter's name and number. I said I had some stuff I wanted to sell to her. I got a call later from a Chase agent, who told me, in passive voice, of course, that what they were doing they considered necessary in their business environment. Whatever. They agreed to stop calling.

Screw 'em all. They're vultures. They prey on kids and old people, and Congress protects them.

What happened? said...

I sold my home and paid my credit card off. I went to my 401k portfolio and transfered all funds that invested in Chase.
I bought another home a year ago. I went with a mortgage company that never sold a loan. Yesterday, I discovered in the mail notification that my mortgage was sold to Chase.

This is America for God's sake. What happened to decency in business? What happen to the right of consumers to chose who they consume with.

Refinancing will cost about $4000 and to go with most mortgage lenders will result in their ability to resell my mortgage.
I can be sold once more to Chase.

Anyone know a crime lord I can do business with?