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'It's crazy': Chase forgiving all debt owed by its Canada credit card customers
- data_spy 7y agoWow! That's one way to get out of the Canadian market. Wonder what the number one cost was the get out of the market the normal way, legal fees?
- Marsymars 7y agoWell they already "got out" of the market by selling off or closing their CC portfolio and outsourcing their CSR responsibilities to a Canadian provider. Their only users remaining were those who've been carrying a balance for the past couple years.
- Scoundreller 7y agoI think it's been about a 16 months since they exited. I overpaid my last bill by a cent in hopes they would waste their time and money to cut me a cheque, but they did not. Their Amazon card was pretty decent: no foreign exchange fee and no annual fee. It was my "daily driver" for non-CAD$ transactions like domain names, hosting, Paypal, Aliexpress. Such a pain for me when they got rid of it.
- xodast 7y agoHave you found a suitable replacement??
- Scoundreller 7y agoHomeTrust Visa: https://www.hometrust.ca/credit-cards/preferred-visa-card/ https://www.hometrust.ca/credit-cards/preferred-visa-card/ Similar to Chase Amazon: no forex charge. No annual fee. Pro: Includes roadside assistance and rental collision insurance, 1% cashback Pros/Cons: Doesn't support tap/RFID payment. Cons: Application can take forever (not sure about current state). Cons: Higher foreign ATM withdrawal fee than Amazon (1.5% vs 1%, with similar minimum fee
- fouc 7y agoThanks, any idea if there's also one with no ATM fees?
- Scoundreller 7y agoDon't believe so. If there are, they're in the $100+/year annual fee club.
- Marsymars 7y agoStack MasterCard or Koho Visa, you just have to be aware of their withdrawal limits.
- bpye 7y agoStack is great until it's not. Don't let it be your only card. I was in Taiwan and couldn't load the card as they were having trouble with their Interac processor. Luckily I have a UK Monzo card that kind of saved the day for ATM transfers. My Canadian bank charge a stupid amount on ATM withdrawals.
- Marsymars 7y agoI use Home Trust like the other poster, but Rogers is also an alternative if you can deal with their weird forex structure and the general unpleasantness of dealing with Rogers. (2.5% forex fee and then 4% cashback on forex transactions, so you still get hosed on forex if you ever get refunds on the card) Home Trust has a few annoyances too, most notably a 10-transaction per day limit that you can run into when travelling. Otherwise Scotiabank Gold Amex recently dropped their forex fee and might work for you depending on spending habits.
- Scoundreller 7y agoMy primary beef with the Rogers card is that it’s Rogers.
- FigBug 7y agoI use Rogers World Elite Mastercard 4% cash back in a foreign currency 2% cash back on Rogers' services 1.75% cash back otherwise Rental car insurance Airport lounge access No fee
- Marsymars 7y agoI had a weird situation where Amazon.com refunded me some import charges some months after the amazon.ca visa was closed, and the money seemed to just disappear into the ether. Amazon.com ended up just issuing me an Amazon.com credit for the amount after I complained.
- hermitdev 7y agoAssuming people are only making minimum payments, they could have had to maintain operations for 20 years or so, even if they otherwise closed the accounts and only accepted credits (to them) and no debits on the accounts. I dont know what infrastructure amd employment levels they would have had to maintain to service the accounts. I'm sure they probably ran the numbers, compared what they'd receive to cost of operations and probably realized itd either be a wash or a money losing proposition and decided to take the cheaper/expedient way out. Personally, I'd love this deal. My CC is closed, but still paying down a very large sum. Got married, assumed my wife's debts and struggling to get our heads above water. Should be clear in another 4 years sigh, maybe sooner if I can get a few good bonuses in the next few years.
- yurishimo 7y agoYou got this! My wife and I have been married just over 5 years now and still have $50k~ of debt left, most of it is her student loans. Don't be afraid to shop around for jobs too. I'm about to transition to a new company making 50% more after putting 5 years in at my current job. Luckily, I liked the job so I had time to really search for another one that would be a good fit culturally as well and that paid more. Now we're going to be debt free hopefully by Christmas 2020 and making $110k/yr and 26 y/o at that time. Not to mention bonuses and raises for both of us in the next 18 months. My wife has only been out of school and working for 2 years as an engineer, so she has plenty of room left to move up and I can keep working for software companies with great work/life balance and people that I like. Win win! Rooting for you :)
- hermitdev 7y agoI'm not worried. We have the savings to cover the debt, problem is I have a hard time touching it, since I work in Back office finance IT. I have access to the entirety of the firms positions and trades. Id like to cash out, because earning 3-4% interest, while paying out 20% interest on around 50k in debt makes far less sense than paying no interesting and paying into a matching 401k... To be honest, this has probably been my single biggest stressor since getting married, and my wife's apparent mental block that finances are tight (when they shouldn't be) and she keeps buying non essential items. A lot of this is self inflicted, then complicated with medical issues on shitty insurance. I mean, the year before I got married, I was debt free, even after been unemployed for 6 months (and I didnt file for benefits, stupidly). We spent too much on our rings, but not on the wedding (we did a JOP wedding and a nice dinner afterward with just my wife, 2 step kids and myself). But, we had to move out of my 1 bed + den apartment into a 3 bed, 3.5 bath townhouse. More than doubled rent, but was necessary. I mean, I make good money, but on my salary, we're struggling, living paycheck to paycheck, in large part of debt I assumed from marriage and medical issues. Kicker is I have the savings to cover it, but cannot get to due to compliance issues.
- al2o3cr 7y agoMy guess: when Chase says "we felt it was a better decision for all parties" they mean "we realized we broke some kind of law without anybody noticing, and selling the debts to collections could turn up evidence of that in future litigation"
- devoply 7y agoFrom what I understand it's not much money as these cards have been unavailable for a year.
- bsder 7y agoMeh, someone did the math and calculated that standing up an organization that obey all the financial laws in order to collect money from a bunch of people who can barely pay the minimum payment probably isn't worth it. If they write off this debt, they probably also get to claim a deduction somewhere on money that they would never be able to collect. (At one point, one of these ilk of companies offered my grandfather the "privilege" of taking a lump sum settlement for his black lung payments. I calculated what principal I expected they needed to reserve to provide his payments, discounted it slightly and hoped that they wanted rid of the accounting and maintenance in order to give him the lump sum. Alas, they weren't desperate enough to get him off the books and we never heard from them again.)
- Scoundreller 7y agoI guess the moral of the story is: reject the first offer and see if they'll come back for more or not, because running any tabulations.
- froindt 7y agoA personal pet peeve of mine is misunderstandings of how taxes work. I'm not sure if you're misunderstanding, but I do want to clarify. They can certainly take a deduction for some money they wouldn't be able to collect successfully. But they can deduct the entire balance now, rather than writing off small portions over the next so many years. Of course, they're simply not getting taxed on money they didn't earn (since it's a deduction, not a credit). The mathematically optimal solution is certainly not to write everything off. They could have sold it to a debt collection company and made a larger profit.
- algaeontoast 7y agoAre we sure this actually occurred? If anything this is going to make it easier for american banks to exploit students and side-step legislation that would actually fix the root of the student debt bubble in America. By this I mean people will now just point to Canada and demand a bailout without really committing effort to passing laws that will prevent exploitative interest rates and pricing schemes by private universities.
- lstamour 7y agoYes, I can confirm it happened. A relative of mine was quite happy when this happened. Myself, I migrated off their cards years ago. That said, I don’t think it will lead to bailout. Debt forgiveness is a rare but standard practice in trying to rebuild credit scores, is my understanding, and a way of getting some return rather than the zilch you’d get from a personal bankruptcy. It’s just that bankruptcy doesn’t affect student loans in the US, so folks are absolutely stuck there...
- derefr 7y ago> It’s just that bankruptcy doesn’t affect student loans in the US, so folks are absolutely stuck there... I mean, in theory (wink), you could always pay off your student loan debt using other forms of debt, and then go bankrupt.
- flaviu1 7y agoCourts aren't stupid, I don't think they'd look kindly upon you if they see you've done this.
- toast0 7y agoYou would need to play the long game here. Maybe use a balance transfer with a promotional rate a couple times to kick the can down the road, and then file for bankruptcy. If this is constituted as a preferential payment, the clawback period is 90 days, if it's considered fraud, it would be longer. However, if someone lets you borrow money unsecured and you use it to pay a non-dischargeable debt, and you can't make the payments on the new debt, that's most likely the new lender's poor judgement.
- hprotagonist 7y agoJubilee is pretty fun.
- setgree 7y agoIf you wanted to design a system to reward addictive spending, it would look like this -- random intermittent reinforcement of problematic behaviors.
- EdgarVerona 7y agoIt's sad because it's true.
- hurrdurr2 7y agoCame here to post this exact sentiment... I mean that one long haul trucker was so ecstatic his almost 7k debt was forgiven and said something to the effect of "I'm glad the number was up there." Really?
- meuk 7y agoYup, it doesn't feel exactly fair too. There's a voice inside of me that says: "It takes me almost a year to save that amount of money, and these people get it for free because they couldn't resist to spend money they didn't have?". But let's just accept that the world is not fair, and it will never be. I still feel great for the people who were in serious financial trouble and are not anymore. Let's just hope they see it as an incentive to never be in that situation again.
- homakov 7y agoIt is a true black swan. I doubt it happens regularly enough to become a reinforcement mechanism.
- Scoundreller 7y agoI wonder how this gets reported to the credit bureaus.
- freedomben 7y agoI don't know how Canada does it, but a lot of those smiles would change at least a little bit in the US when they get a 1099-C in February and realize the IRS counts debt forgiveness as taxable lump-sum income.
- Scoundreller 7y agoAccording to the article, it's only the case if you were using the card for business. And if you were a business that couldn't pay your 27.99% credit card for 16+ months, you have losses to count it against.
- eridius 7y agoPresumably the article is talking about Canadian tax laws, whereas the parent is talking about US tax laws.
- coldtea 7y agoIs that the case anywhere else on the universe - besides totalitarian dystopias?
- CamperBob2 7y agoThis law is likely to exist because someone treated 'debt forgiveness' as a loophole for earning tax free income.
- ac29 7y agoProbably as a way to get around gift or estate taxes - if you can just "loan" someone money, then forgive it immediately, gift and estate taxes are trivially avoided.
- lonelappde 7y agoThe gift tax exemption is higher than the amount of unsecured debt most people owe.
- dxf 7y agoI didn't see it in the article, but I wonder how much debt that was forgiven was actual credit extended for purchases (which is money that Chase has "lost" as they won't recover it) and how much debt was interest+fees on the credit they extended.
- faissaloo 7y agoBetter not to own a credit card in the first place, with so many people in so much debt you really should be questioning the notion that there's a 'responsible' way to use a credit card.
- falsedan 7y agoFUD
- proaralyst 7y agoWell, there is a responsible way: use it like a charge card.
- CalRobert 7y agoIt's the only reasonable method I know for renting a car.
- alimbada 7y agoI've rented cars with a regular debit card. Why would it need to be a credit card?
- lmkg 7y agoDepends on the rental company and the rental contract. A lot of renters want a credit card rather than a debit card, as assurance you can pay additional charges/fees/damages should they occur. In cases where I put down a credit card, I usually see a hold on the card that's 20% higher than the rental contract, but that gets replaced with a regular charge later. The extent to which this is necessary varies from context to context. For example, whenever I've been at an airport location, the rental companies have said they can only use a debit card if you have an itinerary with a return flight. Presumably you're a lower theft risk or something. I'm sure it's all negotiable and/or there are a dozen other conditions where they will accept a debit card. Things like having a rewards membership or good rental history, purchasing insurance through them, using AAA, etc. Honestly even within the same company, the specifics seem to vary by location. Presumably some rental companies don't have such a policy at all because low-credit individuals are a large portion of their customer base.
- breakingcups 7y agoOh man, I'm predicting a new wave of scam emails in the coming months. Legitimate news articles like this are irresistible to the 419 scammers.