Payment Card News

Over-Limit Fees

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The growth in fees for exceeding credit card limits slowed down again in 2005 as the average crossed the $31 milestone. Last year, the average over-limit fee increased 2.9%, compared to 3.8% in 2004, and 32.3% in 1997. Between 1994 and 1999, over-limit fees grew 96%, from $12.75 to $24.96. After a huge run-up in 1997 and 1998, over-limit fees quickly downshifted, increasing 17% over the past five years. 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 2005, the most common over-limit fee among major issuers was $35, although some issuers charge $39 for accounts with higher balances.

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|_4. OVER-LIMIT FEE HISTORICAL |
|_. | Year | Average | Y/Y CNHG |
|_. | 1994: | $12.75 | + 2.6% |
|_. | 1995: | $13.20 | + 3.5% |
|_. | 1996: | $13.94 | + 5.6% |
|_. | 1997: | $18.44 | +32.3% |
|_. | 1998: | $21.14 | +14.4% |
|_. | 1999: | $24.96 | +18.1% |
|_. | 2000: | $25.99 | + 4.1% |
|_. | 2001: | $26.88 | + 3.4% |
|_. | 2002: | $27.89 | + 3.8% |
|_. | 2003: | $29.23 | + 4.8% |
|_. | 2004: | $30.35 | + 3.8% |
|_. | 2005: | $31.22 | + 2.9% |
|_4. Source: CardData (www.carddata.com) |

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