Chase sees $750M cut from credit card law

JPMorgan Chase & Co. expects its credit card income to drop by up to $750 million because of recent regulations -- and a lot of customers will get cut off as a result, The Associated Press reports.

In his annual letter to shareholders released late Wednesday, CEO Jamie Dimon said the New York-based bank expects a $500 million to $750 million hit from the credit card reforms that took effect Feb. 22 prohibiting what he referred to as "certain practices that were not considered consumer-friendly."

The law bans moves such as changing interest rates on existing balances, and charging over-the-limit fees without customer permission.

"We believe that many, but not all, of the changes made were completely appropriate," Dimon wrote. He noted that before the law was enacted, Chase eliminated some of the now-illegal practices, like universal default, where card rates would rise if a payment on an unrelated bill was late.

However, the law's prohibition on existing balance rate hikes, and the provision that requires all payments be applied to the highest interest rate balances prompted a response. The bank reduced credit lines and canceled cards customers hadn't used for an extended period, for instance.

Chase also sharply cut the number of offers featuring low introductory rates and promotional rate balance transfers, which alone reduced outstanding balances by $20 billion, Dimon said.

The bank also will no longer offer cards to 15 percent of its current customers. "This is mostly because we deem them too risky in light of new regulations restricting our ability to make adjustments over time as the client's risk profile changes," Dimon wrote.