Consumer Payment Card News

Over-Limit Fees

Fees for exceeding the credit limit increased at a slightly faster pace than late fees last year. During 2003, the average over-limit fee increased 4.8%, compared to 4.6% for late payment fees, ending the year with an average fee of $29.23. 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 just 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 2003, the most common over-limit fee among major issuers was $35, although some issuers charge $39 for accounts with higher balances. Consumers near their credit limits should be aware that finance charges added to the account after the close of the current billing cycle can cause an over-limit status, even if the minimum payment has already been posted.

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|_3. 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% |
|_3. Source: CardData (www.carddata.com) |

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