Thursday, Jan. 15
Posted 2 p.m.
Chase drops WaMu secured card, FICO score
Bankrate reporter Leslie McFadden contributed this entry.
Chase hasn't exactly been on a roll with its credit cardholders. Recently, Chase imposed a $10 monthly service fee and hiked the minimum from 2 percent to 5 percent of the balance for what they said was a small number of accounts with high balances. Dozens of irate readers have fired off e-mails to us, declaring that their account was targeted because of a transferred balance with a low APR for the life of the loan. My editor and I have each followed up with Chase, only to be given the pat answer that "those who are impacted have carried large balances for over two years while making little progress in paying them off."
We even specifically asked Chase if people who had "low rate for the life of the loan" cards were targeted and they said no, and repeated the "blah, blah, blah" above. Our anecdotal evidence suggests otherwise.
Usually we advise people who aren't happy with changes to their credit card to just shelve that card and move on to another. But with a $10 monthly fee being charged, we can't advise people to pay $120 a year for a card they don't use. Yet canceling the card will lower their credit score.
So cardholders are over a barrel here. And the bad news doesn't stop there.
Washington Mutual cardholders will soon join the ranks of Chase customers when their accounts are converted to Chase accounts. JPMorgan Chase purchased WaMu's banking assets and customer deposits from the Federal Deposit Insurance Corp. in September. WaMu customers may not be happy about that because they may lose free FICO scores and have to surrender secured credit cards.
The free FICO score available to WaMu cardholders won't survive the transition, according to CreditMattersBlog.com. The story reports that Chase will issue notices later this month and phase out the score starting in March. Chase doesn't offer the same perk, so WaMu cardholders will have to kiss their free FICO scores goodbye if the unnamed sources are correct.
Stephanie Jacobson, a spokeswoman for Chase Card Services, denies that a decision has been made to shutter the FICO score offer. She wrote in an e-mail that Chase is "still evaluating WaMu products and services, including WaMu's FICO Score program."
Jacobson did confirm that Chase will "discontinue WaMu's small, secured credit card program and close associated accounts." With no secured cards offered by Chase, those who can't qualify for one of their unsecured offers will have to shop elsewhere. She says Chase has notified affected cardholders and will refund the savings account balances to the secured cardholders, minus amounts owed, and will credit any unused portion of the annual fee.
Closing an account, whether it's secured or unsecured, can damage your credit score, especially if it was your oldest account, had the highest credit limit or was your only account. "You could lose over 50 points or your credit score entirely," says Emily Peters, credit expert for Credit.com, and formerly a consumer credit expert at TransUnion.
Ask away: To leave you on a bright note, as of Feb. 4, I will become Bankrate's new Credit Card Adviser. I'll be answering one reader question about credit cards or credit scores every Wednesday. E-mail your head-scratching queries to firstname.lastname@example.org.
Comments? Questions? E-mail us at Plastic_Rap@Bankrate.com.