CHEVY CHASE INTEREST
AIR DATE: MAY 14, 1996 6PM
CREDIT CARD INTEREST RATES. THE NATIONAL AVERAGE IS ABOUT 18% RIGHT NOW. WHILE THAT MAY SOUND HIGH, WHAT IF YOUR BANK DECIDED TO CRANK YOUR INTEREST RATE AS HIGH AS 26%?
AS NEWS FOUR CONSUMER REPORTER ELIZABETH CRENSHAW REPORTS TONIGHT THAT'S JUST WHAT'S HAPPENING TO SOME FOLKS IN OUR AREA...AND THE BANK DOING THE CRANKING HAS ITS' ROOTS IN OUR COMMUNITY.
22 PERCENT, 24 PERCENT, 26 PERCENT. THAT'S WHAT CALLERS ARE TELLING US. THE BANK...CHEVY CHASE...A LOCAL BANK WITH 2 MILLION CREDIT CARD ACCOUNTS....A BANK THAT GOT INTO THE CREDIT CARD BUSINESS BY OFFERING SOME OF THE LOWEST RATES IN THE COUNTRY.
BUT TODAY, FOR SOME CHEVY CHASE CUSTOMERS, SKY HIGH INTEREST RATES ARE THE NAME OF THE GAME.
Linda
Chevy Chase Customer:
"I was really angry. I felt trapped."
Steve
Chevy Chase Customer:
"They have you nailed. You have no choice."
HOW WOULD YOU FEEL. YOU GET YOUR CREDIT CARD BILL. AND YOU NOTICE YOUR INTEREST RATE HAS JUMPED 6 OR 8 PERCENTAGE POINTS.
STEVE LAPP WAS USED TO PAYING 14 TO 17% INTEREST ON HIS CHEVY CHASE CARD. BUT IN JANUARY, HE GOT HIT BY CHEVY CHASE WITH A 26.5 PERCENT INTEREST RATE.
LINDA WEINBERG HAD BEEN PAYING A VERY LOW RATE OF 11%...BUT THEN IT JUMPED TO ALMOST 25 PERCENT.
Linda
Chevy Chase Customer:
"I've been a customer for 10 years, I pay my bills on time."
WHAT'S GOING ON HERE? IT'S NOT CLEAR. WRITTEN MATERIAL FROM CHEVY CHASE TELLS THE CUSTOMER THE INTEREST RATE IS CHANGING AND THE NEW RATE WILL APPLY TO EXISTING BALANCES AS WELL AS NEW TRANSACTIONS...BUT IT DOES NOT SAY WHY.
THIS CUSTOMERS BILL SAYS "CHEVY CHASE BANK HAS MOVED ITS' HOME OFFICE TO VIRGINIA. EFFECTIVE IMMEDIATELY THE TERMS AND CONDITIONS OF YOUR CREDIT CARD ACCOUNT WILL BE SUBJECT TO VIRGINIA LAW."
THIS IS THE CORPORATE EXECUTIVE OFFICE FOR CHEVY CHASE BANK. AS YOU'D EXPECT IT'S LOCATED HERE IN CHEVY CHASE MARYALND..A STATE WHERE INTEREST RATES ARE CAPPED AT 24%.
BUT THIS IS NOW THE HOME OFFICE OF CHEVY CHASE BANK. NO LONGER IN CHEVY CHASE MD, BUT HERE IN MCLEAN VIRGINIA. A STATE THAT ALLOWS A BANK TO CHARGE YOU ANY INTEREST RATE IT WANTS.
Ruth Susswein
Bankcard holders of America:
"Virginia there is no rate cap. In Virginia there is no cap on fees. So if a bank
like Chevy Chase moves across the street to VA, it is no longer required to limit what it
charges in interest rate or in fees. And that is the big benefit Chevy Chase gets for
making that move recently."
Steve
Chevy Chase Customer:
"Here they have baited you with low interest rates, now they move to VA where they
can jack them up."
Linda
Chevy Chase Customer:
"I feel like they just cheated. Chevy Chase is a MD bank. What are they trying to
do?"
CHEVY CHASE BANK EXECUTIVES DECLINED AN INTERVIEW ON CAMERA WITH US FOR THIS STORY, BUT PROVIDED A WRITTEN STATEMENT OF THEIR CREDIT CARD POLICY.
THE BANK SAYS IT RELOCATED ITS' OFFICES TO VIRGINIA FOR A "VARIETY OF REASONS" INCLUDING LAWS CONCERNING "CONSUMER CREDIT."
CHEVY CHASE SAYS WITH REGARDS TO ITS' RATE INCREASES...ONLY A "LIMITED SEGMENT" OF ITS' CARD HOLDERS RECEIVED RATE INCREASES..AND THEY WERE CHOSEN BECAUSE THE BANK IDENTIFIED THEM AS HAVING A "RISK OF DEFAULT SIGNIFICANTLY HIGHER THAN AVERAGE."
RUTH SUSSWEIN SAYS OTHER BANKS ACROSS THE COUNTRY HAVE STARTED IMPOSING WHAT SHE CALLS "PENALTY INTEREST RATES." YOU DON'T NECESSARILY HAVE TO HAVE MISSED A PAYMENT OR BEEN LATE. SOMETIMES JUST HAVING LOTS OF OTHER CREDIT CARDS CAN BE THE TRIGGER.
Ruth Susswein
Bankcard holders of America:
"If in fact they are being charged a penalty rate. Who is it helping? Does it help
the card holder who maybe having trouble paying the interest rate now, to be charged 4,6,8
points more in interest than they were the month before. Do they really expect to see that
bill paid off. Does the bank expect to see that money over time?"
Linda
Chevy Chase Customer:
"At first my inclination was to sit down and cry. I thought how am I ever going to
get out from under this. I called a couple other credit card companies and was able to
increase my credit limit. I transferred to other credit cards. I had a camping trailer. I
just sold it and used that money to pay off the remainder so I could get out from under
it."
BANKCARD HOLDERS SAY THAT'S JUST THE RIGHT THING TO DO. IF YOUR BANK HITS YOU WITH A HIGH INTEREST RATE, START SHOPPING. YOU MAY NOT BE ABLE TO GET THE BEST RATES IN THE COUNTRY, WHICH BY THE WAY SOME ARE AS LOW AS 6 PERCENT. BUT YOU SHOULD BE ABLE TO DO BETTER THAN 22 24 OR 26 PERCENT.
SHOP FOR A BETTER RATE AND THEN TRANSFER YOUR BALANCE TO THE NEW CARD.