Chase Ending Universal Default Penalty
Chase is ending this questionable credit card practice…
There’s good news for Chase customers. Starting in March of 2008, the widespread practice known as “universal default” - a policy that raises interest rates based on a consumer credit report will end as they debut their new Clear and Simple plan. Universal default allows credit card issuers to raise interest rates when a customer is late or misses a payment - even if they missed the payment with another creditor or bank. Chase Card Services CEO Gordon Smith announced the new plan which is designed to build lasting, loyal relationships between Chase and their customers. With the new program, interest rates will only go up if a payment is made late or the account goes over the available limit. The move follows Citigroup who led the way in March by ending universal default and rate increases for any reason.
Although the moves by Chase and Citigroup are positive for consumers, many view them as an effort to avoid legislative action by Congress to regulate the credit card industry following Senate hearings in March 2007. Universal default is one of the many practices under scrutiny - but there’s still many more changes needed.
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February 12th, 2008 at 10:44 am
[…] The move is especially surprising since recent congressional hearings slammed credit card companies for raising rates on customers who pay on time. By law, credit card issuers can change terms any time they choose - as long as they give borrowers prior notice. Even so, JPMorgan Chase (JPM) and Citigroup (C) recently announced they would stop the practice of raising card rates based solely on FICO scores. […]