JPMorgan Charges 5% on Credit-Card Balance Transfers

Will the other banks follow...

June 24 (Bloomberg) -- JPMorgan Chase & Co. is raising some balance-transfer fees on credit cards to 5 percent, the highest among the nation’s largest banks, citing increasing regulations and costs after the U.S. put new curbs on the industry.

JPMorgan, the biggest credit-card issuer, disclosed the increase in a notice mailed to customers this month that referred to “new federal regulations.” The New York-based lender starts charging more in August, just as the law designed to curb interest-rate increases, fees and marketing practices begins to take effect.

The credit-card law President Barack Obama signed May 22 prompted warnings from industry executives that they’d be forced to raise fees, curtail credit and restrict consumer rewards. Hearings are scheduled today in Congress on Obama’s proposed Consumer Financial Protection Agency, which would have authority over increases like the one JPMorgan is planning, House Financial Services Committee Chairman Barney Frank said.

“What Chase is doing is strengthening the argument for the new entity,” Frank, a Massachusetts Democrat, said in an interview today before the hearings. Banks should be able to impose fees to cover their costs, not to create a “new profit center,” he said.

Top Rate
The rate increase at JPMorgan also affects cash advances, and fixed rates will become variable, the notice said. The bank didn’t specify the current average fee for balance transfers, and JPMorgan spokesman Paul Hartwick declined to say how many customers are affected. The notice says JPMorgan may choose to offer a lower transfer fee; Hartwick declined to elaborate on how customers might qualify.

“In the current economic environment, our costs of doing business have been impacted by increased losses,” Hartwick said in an e-mailed statement. “We are increasing balance-transfer fees to reflect the increasing costs.”

JPMorgan’s 5 percent fee tops the 4 percent that Bank of America Corp. implemented June 1, citing increasing costs. Bank of America ranks third by cards outstanding, according to industry newsletter the Nilson Report.

“This is the highest balance-transfer fee in the industry,” said Bill Hardekopf, chief executive officer of LowCards.com, a Birmingham, Alabama research firm. “It is setting a new precedent that I’m afraid other issuers may follow.”

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