Chase "Forces" Me to Close My Favorite Business Credit Card

It's the old credit card bait 'n switch. The credit card banks bait you with attractive terms and generous rewards programs to get you to signup. Then, they wait. They wait for you to accumulate a large enough balance, then jack up your interest rate. I've been reading about this a lot on other websites recently; now it's happened to me, with my Chase business credit card.

Just got a snail mail notice from Chase informing me that the company is going to raise the interest rate on my favorite business credit card, from a fixed rate of 9.9% to a variable rate of (Prime + 11.99%) = 15.24%. 15.24% is now the interest rate floor for this card, since Prime is not likely to go any lower. Of course, I have the option to opt out of the change. This would cause my account to be closed, and I would then continue to pay the balance down to zero at the original 9.9% APR.

Thankfully, I'm prepared for this contingency. I plan on paying the balance off with some cash from savings.

I don't have to borrow any money via Lending Club to payoff my Chase business card, but I really like the idea of Lending Club -- bypassing the banks and borrowing from regular folks across the country -- and I want to go through the process of borrowing through Lending Club myself so that I can report on my experience here in this blog.

To be perfectly honest, I really like my Chase business card, but, clearly, it's time for us to part ways. With the U.S. Prime Rate at 3.25%, any rate above 10% is a subprime rate, in my opinion, and I'm not a subprime borrower. I took advantage of an excellent 0% intro APR offer with this card, and, when the 12-month, interest-free period ended, I used the cash back rewards program to lower my cost of borrowing to a nominal level.

I really like the cash back rewards program with this card. I spend money on it and reward points accumulate. Then, when points reach a certain threshold, I simply login to my account and request a statement credit. With a few business days, the statement credit is posted to my account. Easy. No forms to fill out, No waiting until the end of the year to get my cash back reward and no waiting for a snail mail check. I will miss this rewards program.

I have to hand it to Chase for being honest. In the change of terms notice they sent, they explained the change as a, "response to market conditions," and they also added that the company wants to "maintain profitability." I'm hating the change but I respect the honesty. Contrast this with the Barclay's notice I received when that credit card bank closed my BJ's Visa Card. The company wrote that it was to, "...help [me] better manage [my] credit accounts..." In other words, not only did they close my account without consulting me first, they also felt it necessary to insult my intelligence.

In other business credit card news: Citi® closed my inactive CitiBusiness® card recently. I will miss this card because:

• it had a decent credit line (~$10,000) which enhanced my business's credit profile, and
• the account was aged which, again, contributes to my business's credit rating. It was my first business credit card.

So now I'm left with 3 business credit cards: two from Bank of America and one from Advanta. The Advanta card is about to be anointed as my "goto" card, because I'm still enjoying 0% intro APR on purchases, and the purchase APR will jump to a somewhat reasonable 7.99% when the interest-free period ends . I have been reading some horror stories about this particular Advanta business card (unwarranted rate hikes), but so far I've all is well. If Advanta tries to pull some funny business by raising my rate, I'll just pay the card off (my credit limit is under $3,000, and my balance isn't anywhere near that.)

As a final note: it's really no wonder that American Express is consistently rated as the best credit card bank. Right now the company is offering some high-risk cardholders a $300 payment (in the form of a prepaid gift card) in exchange for these accountholders paying their balance down to zero within a certain timeframe, and closing their account. Now that's my kinda' credit card bank!

NB: In that same JD Power & Associates Credit Card Satisfaction Study(1), Discover Card placed second.

Chase, on the other hand, has identified certain credit card accounts that may be at risk for default, and has responded by imposing a $10 per month fee. Yikes! I'm not a public relations professional, but I do have some sage advice for JP Morgan Chase CEO Jamie Dimon: stop doing that!

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Chase Cancels My WaMu Credit Card

I hadn't used my WaMu credit card since the first quarter of 2006. Back then, it was a Providian credit card. But then Washington Mutual (WaMu) bought Providian, and, just recently, Chase bought WaMu.

Now, the reason I wasn't using this card is because a) it didn't have a competitive interest rate for purchases and b) the rewards program attached to it wasn't anything special. I had plenty of cards to choose from, so why would I choose one with a high APR and a very ordinary rewards program? I used this card to take advantage of an attractive 0% balance transfer deal, then, when the interest-free period expired, I paid the card down to zero. I kept the account open because the $11,000 worth of credit available to me with this account was helping to keep my credit score high.

Another reason I liked having this account was because I had free access to my Bankcard FICO credit score (provided by TransUnion.) No other card in my wallet (and I have plenty) offered this unique benefit.

Last month, I received a letter in the mail informing me that Chase was closing my WaMu credit card account because I hadn't used it in more than 12 months. The letter was short and to the point:



I wasn't happy about this. First of all, my FICO® credit score would likely drop due to the decreased amount of credit available to me. Second, I liked having free access to my credit score. Who wouldn't?

So my first reaction was to try and use the card to see if Chase had deactivated it yet. I tried to buy a song from Amazon ($0.99) but the charge didn't go through.

Next, I called the customer service number on the back of my card. Despite the late hour, I was able to talk to a customer service representative (CSR) right away. I asked the CSR to reactivate my card. I told him that I wanted to do some Christmas shopping with it immediately (which wasn't a lie. I would have spent some money on the card to keep it open.) The CSR said he couldn't do it (listen to the MP3 audio here.) He explained that WaMu had closed 1.3 million inactive accounts. The CSR anticipated that I would complain about the negative effect this action would have on my credit score, so, before I could say anything, he went on to say that this action, "will not appear as a negative mark on your credit bureau report." I complained a bit, then he explained that because the account was closed due to inactivity, and because my account had a zero balance, I had nothing to worry about.

I did not see any point asking for a supervisor, but I did call back a few hours later (their CSR's are available 24/7) to see if I would get a consistent response to my reactivation request. The second CSR gave the same canned response to my appeal for reactivation, but also added that I could apply for a new WaMu credit card account if I wanted to (MP3 audio here.) This suggestion made sense to me even though I wasn't happy about it. The "don't worry about it" nonsense that CSR #1 gave me was insulting, because we both knew that my score will be affected. I'm just going to hope that the ding to my score is a mild one.

My credit score is 804 right now and I want it to either stay there or rise. So, should take my time and find a really great credit card and apply for it?

Having thought about it for a few seconds, I've decided to apply for another WaMu (Chase) card, because I want my credit score to stay high and I want free access to my score. According to the WaMu website, all WaMu cards still provide free access to the accountholder's FICO.

I found that I can still login to my WaMu account online, so I visited WaMu to see if they had any credit card offers ready and waiting for me. I found no offers in there.

I will try to find a good WaMu card and apply for it. I'll post again after my application is processed.

So I may end up with another WaMu credit card account after all this, which would be a silly waste of time and resources (paper, plastic, phone calls, etc.)

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