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Late Fees

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After doubling between 1994 and 1999, increases in late payment fees on credit cards has slowed considerably. During 2003, the increase in late payment fees slowed to its lowest level in more than a decade. Last year, the average late payment fee was $31.44, up 4.7% over 2002. Over the past five years, late payment fees have risen 23%, compared to a 104% increase between 1994 and 1999. The largest single year gain in late fees occurred during 1997, when average fees rose from $14.21 to $19.24, a 35.4% increase, according to CardData (www.carddata.com). On June 3, 1996 the U.S. Supreme Court ruled that card fees should be treated the same as interest rates when it comes to the preemption of state laws. Previously the Supreme Court ruled commercial banks may charge interest rates on credit cards subject to the limitations imposed by the bank’s home state or issuing state, not the cardholder’s state of residence. The ruling gave the same protection to fees associated with a bank credit card program. During 2003, the most common late fee among major issuers was $35. Some issuers have pushed the fee to $39, with some experimentation at the $49 level, according to CardWatch (www.cardwatch.com).

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|_3. LATE FEE HISTORICAL |
|_. Year | Average | Y/Y CNHG |
|_. 1994: | $12.55 | +4.8% |
|_. 1995: | $13.25 | +5.6% |
|_. 1996: | $14.21 | +7.2% |
|_. 1997: | $19.24 | +35.4% |
|_. 1998: | $22.10 | +14.9% |
|_. 1999: | $25.61 | +15.9% |
|_. 2000: | $27.10 | + 5.8% |
|_. 2001: | $28.29 | + 8.1% |
|_. 2002: | $30.04 | + 6.2% |
|_. 2003: | $31.44 | + 4.6% |
|_3. Source: CardData (www.carddata.com) |

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