Credit card shock - miminum payments may rise abruptly

Fort Worth Star-TelegramOctober 8, 2009 

Paul Baker was smacked with a rude surprise when he opened a notice from his bank informing him that his minimum monthly payment had skyrocketed from $560 to more than $1,300.

The 31-year-old Stephenville man didn't have one of those toxic subprime mortgages with a teaser rate that suddenly reset. It was a Chase Freedom credit card.

"The payments are now bigger than my mortgage," said Baker, who used the card to help fund his educational-toy business.

Chase didn't alter the 4.9 percent interest rate. Instead, it ratcheted up his minimum payment from 2 percent of principal to 5 percent.

Baker is not alone.

Major banks are scrambling to cull their least profitable cardholders by making terms difficult or by raising interest rates before the new credit card reform bill takes effect Feb. 1, said Mitch Franklin, an assistant professor of accounting at Syracuse University’s Whitman School of Management.

"I know people who have 800 credit scores getting their line of credit cut," Franklin said in a call from New York. A credit score over 750 is generally considered strong.

Aside from higher rates and increased minimum payments, consumers have complained of fixed rates being changed to variable rates; new fees; a decline in new offers; and fewer rebates and rewards, said Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling.

Read the complete story at

McClatchy Washington Bureau is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service