Consumer Payment Card News

Fee Frenzy

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While promotional credit card pricing continues to reach historical lows this holiday season, card issuers are continuing to jack-up back-end fees and pump-up punitive interest rates. Other yield tweaking includes the use of the two-cycle interest calculation method, the use of a daily periodic rate to compound interest charges, shortening of grace periods and the creation of new fees. According to the upcoming, January issue of CardTrak (, credit card fee income has grown 79% over the past two years while interest income has only increased by 9.8%. The growth in fee income is linked to higher late fees and over-limit fees. According to CardData ( late payment fees have soared 58% over the past 24 months, from an average of $13.88 to $21.94. Among the top ten issuers late payment fees now average $26.10. Industry-wide, over-limit fees now average $21.02, up 53% since Nov. 96. Among the top 10 issuers, over-limit fees now average $25.70. Some issuers are imposing fees for closing an account, not using an account for at least six months and for customer service. Grace periods have been slowly shrinking from 25-30 days to 20-25 days over the past three years.

1998:  $17.9B  (+20.9%)1998:  $57.4B  (+8.0%)
1997:  $14.8B  (+48.0%)         1997:  $53.1B  (+1.5%)
1996:  $10.0B  (+20.5%)         1996:  $52.3B  (+23.9%)
1995:  $ 8.3B  (+13.7%)         1995:  $42.2B  (+21.3%)
1994   $ 7.3B     NA            1994:  $34.8B     NA

Source: CardTrak ( and CardData (
both services of CardWeb, Inc.

NEWS MEDIA NOTE: The above story was the basis for an article that ran into today’s (12/15) The Wall Street Journal “Money Section” written by Karen Hube. Robert B. McKinley, president of CardWeb, Inc. will be available in Washington, DC today for interviews. To contact call Ann or Terri at 1-717-338-1885.

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