JPMorgan will set the highest rates on balance transfers

JPMorgan Chase & Co. is increasing some balance-transfer fees on credit cards to the highest among the nation's largest banks – 5%. This step was referred to "new federal regulations." JPMorgan spokesman Paul Hartwick said in a statement e-mailed to customers: "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 for these transactions."

Cash advances at JPMorgan will also be affected by rate increase. Fixed rates will become variable. The number of affected customers is not known, because JPMargan spokesman declined to comment.

JPMorgan’s 5% charge tops in industry. Bank of America Corp implemented 4% charge June 1, also citing increased costs. "This is the highest balance-transfer fee in the industry," said Bill Hardekopf, CEO of LowCards.com, a research firm. "It is setting a new precedent that I'm afraid other issuers may follow."

Obama signed The Credit Card Accountability Responsibility and Disclosure Act requires issuers to apply payments to balances with the highest interest rates first and prohibits "universal default." "We fully expect issuers to increase the cost of their fees to compensate for the loss of revenue that they expect once the regulations take effect," Hardekopf commented.

According to PMorgan CEO Jamie Dimon, the new rules could cost the bank about $500 million. Losses of the company in the first quarter were about $547 million. Moreover, profit isn’t expected to be earned.