Two Ways: JPMorgan Tightens the Screws on Debtors-Minyanville

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Two Ways: JPMorgan Tightens the Screws on Debtors

Terry Woo Jun 30, 2009 4:55 pm

Two Ways: JPMorgan Tightens the Screws on Debtors


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JPMorgan Chase (JPM) said it would raise the minimum payment on credit-card balances from 2% to 5%, less than a month before new federal rules on marketing practices and rates kick in.

The change will take effect in August, according to Bloomberg, and will only apply to select accounts with a revolving balance. JPMorgan, the largest credit-card issuer in the US, said customers who pay less than the minimum amount will be charged extra fees.

This announcement follows a move earlier this month to increase its balance-transfer fee on credit cards to 5% (up from 3%). Chase said “new federal regulations” were the cause.

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On May 22, President Barack Obama signed into law a bill restricting interest-rate increases and penalties. Credit-card companies opposed the measure, saying it would push up fees, cut off rewards, and keep credit from those customers who need it most.

This new law takes effect on August 20.

For more on the economy, see Professor Kevin Depew’s Five Things: Five Themes for 2009 Mid-Year Scorecard.

From the Bull Pen: Bulls can look to Cash America (CSH) for an upside play. Bad times are good for this company. For the passive investor, a sell stop can be set below recent lows (near $20-21).

From the Bear Cave: Poignant comments from Professor Zucchi on the Buzz and Banter today:

“[The increase] means that on the average $8,500 balance, the monthly payment will rise from $170 to $425, or just about what is necessary to bankrupt a whole new batch of people. Should you fall in that unfortunate category, please do not forget to call and thank your congressman for once again using both of his/her neurons to look after your welfare.”

We'll get more data from this week’s jobs reports -- but from the looks of it, the consumer recession has only just begun.

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Ed G

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07-01-2009, 10:42 am
I would suggest its more than "call your Congressman" when it comes to banks sticking it to the consumer. Rember, the banks sent card apps to anyone who was breathing assuming their scoring models and high interest charges would maximize Read More

Fred Fischer

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07-02-2009, 1:29 pm
with an astounding 130% of debt to income, this is BTW consumer debt like CC, auto, student loans, not the dasterdly mortgage I can only assume this will bury a few more OVER BURDENED CONSUMERS However, last time I checked - Read More


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