File this story under, dreams do come true. American bank Chase is forgiving all outstanding debt held by its Canadian credit card customers.
The move will see balances wiped out from two now-defunct credit cards. The Amazon.ca Rewards Visa and the Marriott’s Reward Premier Visa. Both cards were retired in March of 2018.
This week customers of these two cards received a letter from Chase Bank alerting them of their good luck. It’s reported Chase Bank even returned the most recent payment on the card and forgave the rest of the balance.
Chase Bank is one part of the global financial firm JPMorgan Chase & Co. It has not disclosed how many customers this affects and how much debt they will pay down. It also is not giving any reason as to why they are making this highly unusual move. Most companies would sell debt owed to them to a third-party collection agency in order to raise some cash. But in this case, they are choosing to forgive and forget the debt of potentially thousands of Canadians.
In an email to Rate Supermarket, Chase spokesperson Maria Martinez said “Chase made the decision to exit the Canadian credit card market. As part of that exit, all credit card accounts were closed on or before March 2018. A further business decision has been made to forgive all outstanding balances in order to complete the exit.”
She went on to say, “Ultimately, we felt it was a better decision for all parties, particularly our customers, to forgive the debt.”
This is great news for anyone carrying a large amount of debt on either of these credit cards. Credit card debt is notoriously expensive. A $1,000 balance on a credit card with a 19.9 percent APR today would take almost 10 years to pay off and cost $979 dollars in extra interest charges if you only made the minimum payments. Recently the province of Quebec brought in new rules that require credit companies to charge greater minimum payments. But even with this change customers will still pay hundreds in interest if they only made the minimum payment. This may sound like a dream come true situation, but let’s put this into perspective. The cards were cancelled last year, leaving no opportunity for customers to charge more. Anyone carrying debt on one of those cards today has being doing so since March 2018. That means they have already paid more than 17 months of interest payments. Carrying credit card debt for that long is also against what most personal finance experts would advise. When you make a purchase on a credit card you should already have the cash in the bank to pay off your balance.
As great as this story is, it’s also very rare. It’s not one that happens often and anybody carrying credit card debt should not bank on the same thing happening to them.
Use a credit card calculator now to figure out how much interest you are paying on your debt. Make a plan to pay your debt off faster by making larger payments and therefore incurring less insurance charges. If your debt is unmanageable look at other options like consolidating your debt with a debt consolidation loan or speaking to a debt counsellor. Carrying credit card debt is an expensive habit and banking on the nearly impossible happening, like it did today, is not advised.