The latest in a long line of financial institutions to unexpectedly change the terms on customers with outstanding credit card balances. The change will increase the interest rates or minimum payments on up to 4 million customers who do not pay off their outstanding credit balance each month. The Bank claims that the changes will affect less than 10% of their customers worldwide, which could still be a very large number of people for a bank with over 70 million credit card customers.

The bank announced that any cardholder with a balance and a single digit interest rate will see that rate move into the double digits beginning in June. Some cardholders will have the option to keep their lower rate, but will not be allowed to make additional purchases without their entire balance being adjusted to reflect the higher rate.

The issue of banks adjusting customer interest rates on credit card balances has been in the news a lot lately. Chase has been accused of pulling a “bait and switch” scheme in which they advertise the opportunity to transfer a credit card balance to a zero interest account for a period of time, only to raise the minimum payment almost immediately after the money is transferred and increasing the interest rate if the customer can’t make the higher payment. The company is paying a settlement of over $300 million to cardholders who filed a class action lawsuit over the rate adjustment.

Bank Regulators and the Federal Reserve have passed new rules that will prevent banks from changing the terms on credit card holders without announcing that possibility in writing, but those changes don’t take effect until July of 2010. Congress is working to put changes in place sooner, but nothing is official on that front just yet. With banks struggling to survive in today’s financial environment, this probably won’t be the last complaint we hear about banks changing the rules on customers.

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Tags: banks, credit card, Interest, Minimum payment

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