Chase received 25 billion dollars in bailout money from the U.S. government. NONE of it was used for it’s intended purpose. Instead, Chase went looking for loopholes left wide open by new regulations. As one of Chase’s longtime customers, I was one of the millions of Americans receiving a notice stating that my minimum payment would go from 2% to 5% effective some silly date. I could circumvent the 150% increase by closing my account or paying the balance off in full before that date.
I hate math, but let’s do some for entertainment purposes. If you owed $1000.00 on your Chase card at a 0% APR, your minimum payment would be $20.00/ month. If your credit card carries interest (usually promotional rates expire at some point) things change a little bit. If you carried the same $1000 on a 14% rate, your minimum payment (2%) would be stretched over 110 months. Your initial payment of $20.00 would be divided in $11.67 on interest and $8.33 towards the principal. Your minimum payment would reduce itself monthly, as you are paying off your balance.
However, if you continued to pay the card off at a steady rate, lets say $20.00/ month your payment cycle would obviously be much shorter (76 months). Logically, borrowing money for shorter terms decreases the total interest paid, all other things remaining equal. Now, how many people do you know, who owe just a grand on their credit card? Lets say you owed $5000.00 at a (more normal APR of around 18%. Your minimum payment would be: $100.00 and at 18% with a 2% minimum you’d be done after 472 months. Your first $100.00 payment would divide $75/$25 between interest and principal. Again, at a steady monthly payment (better for household budgeting purposes) you’d be done after 94 months…
Chase used the existing loophole to raise minimum payments from 2% to 5% in an effort to “help American’s get out of debt faster”. Haha! Check this out:
At 5% minimum payment and (of course) the same 18% interest rate these $5000.00 will now come with a $250.00 minimum payment. It will take you 103 months to be done. There’s an additional $150.00 taken out of whatever budget you may have, overnight. If yere you able to swing $250/ months steadily, you’d be done after (DRUMROLL) 24 MONTHS. This seems like a good option, but the intent behind the act was nothing short of criminal. Chase knew that customers with sometimes extremely high balances would go belly up. Imagine owing the average $15.799* with an average interest rate of 14.89% and watch your minimum payment go from $315.98 to $789.95
Sick yet? You know what happens if you send less than the minimum, right? Your interest rate reverts from wherever it was to up to, 29% + penalty fees!!! Your chances of getting this erased from your credit rating (biggest scam in history) will depend on your ability to retain a expensive attorney. The shebang will however likely bankrupt you before things are settled.
Here’s what Chase did.
Knowing that the majority of customers had been tricked into ARM mortgages, paying on credit monthly for financed cars, groceries and other goods, they also knew that customers would not likely stop using their credit cards. After a jump in minimum payment, a devils circle was artificially created which will keep Americans in debt, close to default and looking for low transfer offers from other companies. However, many Americans spread their debt between different credit cards. Only cards with no balance are likely to be offered one of the 0% APR – 6.99%APR teaser rates. People also are careful when they read the words: BALANCE TRANSFER FEES.
Averaging anywhere between 3-5%, changing to a lower interest card can tag a bunch of money onto the balance you already owe. After the transfer is completed, your balances will be split between promotional APR’s and “normal APR”. Your minimum payment was (initially) always applied to the lowest APR balance, with everything above and beyond minimum payment going towards interest and principal on your higher interest balance. DANG! What a genius trick! The only customers benefiting from such deals are those who will use the balance transfer, live with a reduced (BUT HOPEFULLY FIXED) monthly payment and STOP USING ANY CREDIT CARDS!
What is the purpose of business?
- Maximize Shareholder Profits.
- Stay in Business.
- Minimum Compliance with Regulatory Environment.
- Usage of unethical decision-making processes to circumnavigate any and all responsibility in case of disaster.
- Reduce legal liability by providing pages upon pages in fine print, fully aware that 85% of it remains UNREAD.
If it was up to me:
The U.S. Government would file a class action lawsuit on behalf of its people against Chase N.A. for intentionally increasing American personal debt with fraudulent motive to levels never seen before. As the United States President, I would openly accuse Chase N.A. of terrorism and crimes against humanity. It is exactly what they have done. Financial fraud should be considered an act of terrorism against the United States. Executives having contributed to it should be subject to the same death penalty or life in prison (bare due process) as anyone who has ever been accused of such action and currently detained in Guantanamo Bay. American citizens (in this case, customers of Chase N.A.) should be subject to restitution and damages, calculating their average increase in opportunity costs. Current debt to Chase NA would be forgiven in full. I would simply extinguish Chase N.A. by EXECUTIVE ORDER. DONE! Chase’s Assets (to include any and all subs) would be seized and used to regain losses on the farce of a bailout.
Financial literacy and education is not taken seriously enough in our country. Remember that debt is not freedom (Debt spells DEPENDENCY) and money spent cannot be money saved, EVER. I am sorry, you cannot walk into a dealership for a new automobile and SAVE MONEY. You can SHAVE $$’s of a current payment with refinancing at more attractive rates, but by all human logic I can muster, SPENDING MONEY IS NEVER SAVING IT!
Get a magnet and slap your credit cards on your refrigerator. Live within your means. Don’t ever borrow against your tax return and never borrow limited life items against your house. Don’t take ARMS. Pay more than the minimum when you can.
Getting out of debt is your way to FREEDOM.
Read up on the Chase Minimum Payment Class Action Lawsuit!