The neg-am credit card

By Felix Salmon
May 19, 2009

Remember those negative-amortization mortgages, where you could pay less than the interest rate and see your total amount owed go up from one month to the next? Those worked so well, now the credit-card companies are following suit!

I got my Chase credit card bill this week and it had a $0 minimum payment, although I had had an abnormally expensive month. It didn’t make much sense til I looked closer and found this on my bill:

“You have the flexibility to skip a payment. You must pay past due and overlimit balances immediately. However,the remaining minimum payment for this month has been reduced to $0. Finance charges will continue to accrue. To reduce your balance, feel free to make a payment.”

I just love that line about “feel free to make a payment” — and also the fact that Chase waited until the balance was abnormally high before it tried this stunt. And people wonder why JP Morgan’s credit card losses are rising fast and could hit 24% on some portfolios.

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