Consumer Payment Card News

Fee Frenzy

After credit card interest rates declined to their lowest levels last year, a fee frenzy is beginning to envelop the credit card industry this year. Chase is set to raise its late payment fee to $35 and its credit card APRs to 19.99%. Beginning May 1st, Chase will raise “preferred” credit card interest rates to prime +11.99% with a 19.99% minimum APR. Credit card “non-preferred” interest rates are going to a fixed 22.99% APR. In the late fee area, Chase is following the tiered pricing structures of other major issuers who recently changed fee policies. Effective May 1st, Chase will charge a $15 late fee for balances up to $150, a $29 fee for past-due balances between $150 and $1200, and a $35 late fee for outstanding balances over $1200. Chase is also notifying cardholders that it will charge a $12 fee to make an account payment over the phone. Chase becomes the third major issuer to boost fees this year, after MBNA and Discover instituted similar policies this month. Discover and MBNA are now charging a $15 late fee for balances under $100; a $25 fee for balances between $100 and $1,000; and a $35 fee for past due balances above $1,000. Last year, Citibank and US Bank boosted late fees from $29 to $35. In 2000, Fleet Credit Card Services began charging a $35 late fee on all its card products including the new “Fusion smart VISA.” Advanta was the first card issuer to institute $35 fees for holders of its business card products. On average, late payment fees, among larger issuers, have increased 145.9% since 1994, from $11.71 to $28.79, according to CardWeb.com’s marketing intelligence service CardData (www.carddata.com).

                             LATE  FEE TRACK  RECORD
                         (For February of Each Year Listed)
                           YEAR      FEE       CHNG
                           1995:    $12.64     +7.9%
                           1996:    $13.25     +4.8%
                           1997:    $14.62     +10.3%
                           1998:    $19.30     +32.0%
                           1999:    $22.89     +18.6%
                           2000:    $25.99     +13.5%
                           2001:    $27.12     + 4.3%
                           2002:    $28.79     + 6.2%
                         Source: CardData (www.carddata.com)

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