Chase No Longer Increases Rates Based on Credit-Bureau Information

Written by Curtis Arnold
Posted On: March 4, 2008

Chase is no longer increasing the rates of cardmembers based on their credit-bureau information as of March 1, 2008.

Consumer advocates have long decried the controversial industry practice commonly known as universal default, under which a customer’s rate could be automatically raised based on a single late payment to another creditor. And, although Chase ceased practicing universal default in 2005, Chase is now going further by completely eliminating rate increases based on credit-bureau information. This change is part of the continuing expansion of Chase's Clear & Simple initiative – an ongoing program to help Chase customers better understand and manage their account.

Effective March 1st, 2008, Chase may raise a customer’s interest rate if they violate the terms of the cardmember agreement by making a late payment, exceeding their credit limit or paying with insufficient funds. However, if a customer’s rate is increased for any of these reasons, Chase offers cardholders a way to lower their interest rate through its “rate reset” option: If a customer signs up for automatic payments and makes on-time payments for 12 consecutive months, Chase will reset the customer's rate to the lower, original non-promotional rate.

I commend Chase for being serious about making their cards more consumer friendly. Given the intense political and media spotlight on the card industry this year, Chase has really raised the bar with this announcement (Citibank is the only other issuer that I'm aware of that has made a similar announcement- they announced earlier this year that they would be eliminating “any time for any reason” increases to the rates and fees of their customers’ accounts). Let's hope that other issuers follow Chase's lead!