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[04:58:41 AM Thursday, May 15, 2008]
Credit Card Fees - the Main Source of Lenders' Income?What is the major source of revenue of credit card companies? - Credit card interest rates and fees. And though you can get a card with no annual fee, and other credit card fees might seem not that hefty to you, these days' fees make up about 40% of credit card issuers' total revenue. A comparative research carried out by Wall Street Journal shows that the revenue credit card companies get form cardholders' fees has increased by 41% over the past 4 years. Today companies make $18.1 billion in fees, as compared to $17.2 billion they earned last year. But the fees still keep rising, promising a larger growth of income to credit card companies and banks. Even under the circumstances of economic slowdown in the U.S. and claims of creditors to be going through hard times, credit card fees alone guarantee that credit card issuers will stay afloat despite any economic crises. Credit cards and fees are inseparable like hand and glove. Penalty fees and default rates are a separate income item for lenders. Over the years fees go up, card holders face new fees, the conditions of charging fees change. Take over-the-limit fee, for instance. Over-the-limit fee used to be a kind of stopper for card holders attempting to buy an item that made them go over the credit limit. Retailers just would not accept a credit card. Today you can make purchases even if you go over your limit. But afterwards, your monthly credit card bill will make your blood run cold. Over-the-limit fees these days are really high. Or you can even be charged a default rate for exceeding the limit. This charge can cost you up to 30% in interest. Late payment fee will hunt you down even if you are just a couple of days late with your credit card payment. As a rule, the average fee amounts to $20. Add to it balance transfer fees, enormous cash advance fees, foreign exchange fees. This is how the companies make money. Meanwhile, companies and banks still cannot get enough. They keep raising fees associated with bad risk, such as late payment fees, default rates. Some creditors even started to charge ATM fees. But, happily, such charges are imposed on card owners of other issuers' customers only. At least for now. Remember about balance transfer fees when shifting balances from card to card. Balance transfer cards are really a great tool that helps you to pay down your credit card debt without losing money on interest. But a 3% balance transfer fee that does not seem to be that high, can actually take away a significant amount of money from your wallet. However, nearly all credit cards come with this fee, so you should look for at least offers with 0% intro APR for balance transfers. This way you will benefit from shifting your old balance, or consolidating debts from several plastics, on a new balance transfer card. Just pay attention to the terms and conditions when applying for a credit card, no matter if it is a cash back card deal, a business plastic, an instant approval offer, or any other. And manage your credit cards wisely and responsibly. Paying your credit card bills on time is about 80% of your success and a guarantee of avoiding penalty fees.
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