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Top credit card issuers hike fees
Two leading providers raise ceiling on late fees, pay-by-phone fees, and balance transfer fees.
February 3, 2004: 6:20 PM EST
By Jeanne Sahadi, CNN/Money senior staff writer

NEW YORK (CNN/Money) Credit card issuers keep raising the bar on fees, as evidenced by two recent changes in fee structures at MBNA and Chase, two of the largest issuers of Mastercard and Visa cards.

MBNA, the second largest credit card issuer, has raised its top late payment fee to $49 for certain customers, according to a recent report by credit card tracker CardWeb.com.

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The $49 late fee will be charged to customers in MBNA's line-of-credit "GoldOption" program who carry past due balances over $1,000, which is typical of the majority of customers in the program, according to CardWeb.com. Those with balances between $101 and $1,000 are assessed a $39 late fee and those with balances below $100 are assessed a $15 fee.

Although technically not a credit card account, the GoldOption program is marketed as a way to pay for everything from personal expenses to debt consolidation. And one of its main target audiences is MBNA card holders, said Robert McKinley, founder of CardWeb.com, in an email exchange.

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In June, MBNA raised its top credit card late fee to $39 from $35. The average in the industry is just over $30, a 56 percent jump since 1998.

About 2 percent of all credit card holders say they sometimes miss a credit card payment, according to Vertis, a marketing services provider that among other things, researches consumer credit use and payment habits. But certain demographic groups miss payments far more often.

For instance, 12.1 percent of cardholders with three kids say they sometimes miss a payment. And among regions, credit card holders in the South Atlantic region (West Virginia, Virginia, South Carolina, North Carolina, Maryland, Georgia, Florida and Alabama) report the highest rate of missed payments (3.4 percent).

The incentive to pay your bills to credit card issuers on time, even if you can't pay the total amount, is not just the threat of high late fees, but the possibility that your credit card issuer will penalize you with a higher interest rate. In a 2003 credit card survey, the nonprofit group Consumer Action found that a higher penalty rate is triggered on the majority of cards after one or two late payments.

Pay by phone, pay through the nose

Cardweb.com also found that Chase, for its part, has upped its expedited payment fees and balance transfer fees. Starting March 1, those credit card customers who wish to pay their Chase credit card bills by phone will pay $14.95, a $2.95 increase over the old fee.

And Chase customers transferring balances from one card to another will face a maximum balance transfer fee of $70, up from the previous $50 cap.

With the changing fee structures at MBNA and Chase, it's a fair bet the industry will take its cue. "Yes, other players will follow," McKinley said.

If they do, that could make the cost of credit even more prohibitive for the average U.S. household with at least one credit card. Its average balance climbed to $9,340 in 2003, up from $8,940 in 2002, according to the latest research from CardWeb.com.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.