Payment Card News

Late Fees

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Rising fees for making a late payment on a bank credit card are running out of steam, peaking at $39. During 2004, the increase in late payment fees slowed to its lowest level in more than a decade. Last year, the average late payment fee was $32.61, up 3.7% over 2003. Four of the nation’s top ten issuers charge a $39 late fee, while the other six charge $35. Citigroup, MBNA, Bank of America, and Providian assess the highest late payment fees. Over the past five years, late payment fees have risen 20%, compared to a 104% increase between 1995 and 2000. 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 2004, the most common late fee among major issuers was $35.

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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% |
|_. 2004: | $32.61 | + 3.7% |
|_3. Source: CardData (www.carddata.com) |

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