Chase to End Extra Fees for Those Carrying a Credit Card Balance

JP Morgan Chase has agreed to stop charging card holders a $10 monthly service fee that it added to approximately 300,000 of its customers’ accounts beginning in January.

The bank has also refunded or plans to refund roughly $4.4 million to consumers charged as part of the change in cardholder terms.

“For a number of years, Chase has offered some of its cardholders very attractive promotional rates for balance transfers or other loan amounts put onto their Chase credit card accounts,” a media release from Attorney General Andrew Cuomo read.

“The offers made clear that a one-time transaction fee, usually 3%, would be charged for this very low promotional rate.”

However, Chase seemed to think it wasn’t enough to pay the one-time balance transfer fee and subsequently let card holders make the minimum payment without some kind of penalty, though the terms said otherwise.

“Despite the promises Chase made in its offer, in November 2008 Chase notified over 300,000 consumers nationwide, that the terms of the prior offer had been changed,” Cuomo’s office said.

“Chase told its cardholders that, in January 2009, it would start charging an additional flat fee - a $10 service charge - each month.  This extra $120 per year in additional fees significantly raised the effective APR on these balances, in some cases more than doubling the effective interest rate.”

Customers were also required to make larger monthly minimum payments; instead of 2% of the balance, 5% was required each payment cycle (not sure what the story is with that as of now).

As part of the agreement, affected card holders will receive a letter from Chase, explaining that as of April 1, the $10 monthly service charge will no longer be collected.

It’s unclear, however, what will happen to the remaining 120,000 or so customers not covered by this settlement.

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