Increased Fees The difference between the "cost" of borrowing money by the banks ("discount rate from Federal Reserve, CD rates) and how much they charge--after adjusting for inflation--is near record levels. Hence, the credit card companies can't raise the annual percentage interest rate (APR) much higher. As a result, they have been increasing the penalties for over-limit and late fees. This is accomplished in two ways: increasing the penalty fees (from an average of $12.57 in 1994 to $24.02 in 1998 per account "infraction") and reducing the grace period for arrival of monthly payments (from as high as 14 days to as low as zero!). The result is an astounding increase in the corporate treasuries of the credit card companies. Between 1994 and 1998, interest income on credit card debts rose from $34.8 billion to $58.1 billion or 67.0% whereas penalty fee income rose from $7.3 billion to $18.9 billion or 159.0%. See "Fee Revenues (7/9/99)" CARDTRAK ONLINE, CardData (www.carddata.com). Return to Module 1 Return to Securing Credit Card Information         Copyright Newtonian Finances Ltd. © 2000-2024 (disclaimer)