"They mentioned on the phone that they switched all of their customers in June to a variable APR despite the fact that my card was a fixed APR for 5 years and those are the terms I agreed to. Is this a loop-hole in the system so that they can suddenly change their rates? I am unsure whether this is a legal issue or simply a deceptive practice. Whatever it is, it's made me certain that I never want to use Chase ever again."
You've obviously never read the card agreement that the bank sends (and amends) on a regular basis. It's that little pamphlet with all the fine print.
To start with, this is not a Chase issue. Every card issuing bank operates the same way. Basically, according to the agreement, the bank gets to change whatever they want to and you have the option of paying it off and going elsewhere (where you'll be treated the same way). As of today, they can change your interest rate and it will apply to a pre-existing balance. The new rules coming next year will limit the banks in this area, which is why they did it before the legislation goes into effect.
The bottom line is that even the new legislation does nothing to cap interest or keep banks from changing the terms of a card agreement. That will continue. As long as that is the case, you will never know what you'll end up paying for something that you charge today.
I often ask people if they would get a car loan where the bank was allowed to change the interest rate, loan term and payment amount at their whim. The answer is always a resounding "no", but that is exactly what happens when you borrow money under a revolving credit agreement. I think if you sit down and take the time to read the entire agreement, you'll be shocked at what the bank is allowed to do.
