JP Morgan is increasing balance transfer fees on credit cards to 5%, citing new federal regulations and expenses after the US government has unveiled new curbs on the credit card industry, reported Bloomberg.
Jamie Dimon, CEO of JPMorgan, said that the Credit Card Accountability Responsibility and Disclosure Act Obama signed, could cost the bank approximately $500 million. The bank had already lost $547 million in the first quarter and against this backdrop, card business was the most challenging.
In an e-mailed statement to the customers, Paul Hartwick, Spokesman of JPMorgan said: “In the current economic environment, our costs of doing business have been impacted by increased losses. We are increasing balance-transfer fees to reflect the increasing costs.”
As per the Nilson Report, JP Morgan’s 5% fee is higher than Bank of America’s 4%, which it has been implementing from June 1, quoting increasing costs. David Robertson, Publisher of the Nilson Report in Carpinteria, California, said: “The lender is trying to see whether 5% is a potential barrier to entry for customers. If people will pay it, then once new rules encumbering issuers take effect, Chase will have an awareness of the role this fee can play in making up for lost revenue.”
