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About a year after discontinuing its only two Canadian credit cards and closing its operations north of the border, Chase has made the stunning decision to forgive all outstanding debt on those cards rather than continue collection efforts.
As of July 27, cardholders of the Chase Amazon.ca Rewards Visa and the Marriott Rewards Premier Visa will see a $0 balance reported to the credit bureau. This means that the act of Chase forgiving debt won’t have any negative impact on people’s credit scores, and any payments made as of July 27 will be returned to customers.
Chase declined to say how many customers were affected by this decision or exactly how much debt was forgiven, though for a bank with over $2.7 trillion in assets under management, the financial cost to Chase was likely fairly limited. Chase reported just over $150 billion in total credit card loans worldwide in the second quarter, with the Canadian debt likely representing just a small fraction of that. Debt collection requires Chase to pay accountants and taxes and collection agencies, so it likely made little sense for the bank to continue that effort a the same time it was winding down its operations and looking to leave Canada.
It’s rare to see feel-good stories about credit card debt or about big banks making generous decisions like this one. But there are two important points to consider with this story. The first is that Chase’s decision to pull out of the Canadian credit card market means there are even fewer card options available for Canadians to earn cash back and travel rewards. While we continue to see new credit products launched in America, the same is not true elsewhere in the world.
Chase told Canada’s CBC news that it chose the debt-forgiveness route so that all its customers would benefit, with a spokesperson saying: “Ultimately, we felt it was a better decision for all parties, particularly our customers.”
However, this isn’t exactly true. Chase’s actions only benefited customers who carried a balance, not those who paid off their bill in full each month. The number one commandment of travel rewards is to never carry a balance on your credit cards, as the interest you pay from month to month will quickly erase the value of any points and miles you might have earned. Put another way — the people who benefit from this decision likely weren’t in it for the points and miles in the first place.
Featured photo via Shutterstock
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