by Bill Hardekopf
A new report shows consumers paid $17.8 billion in penalty fees on their
credit cards last year, an 8 percent decline from the $19.4 billion in
According to the R.K. Hammer Card Penalty Fee Index, fees have fallen for
three consecutive years, ever since the CARD Act was passed in May of 2009. That
legislation put restrictions on the dollar amount of late fees and prohibited
issuers from automatically charging an over-the-limit fee when a cardholder
exceeded the credit limit; a fee can only be charged if a consumer "opts in" to
allow these transactions to go through and pay the penalty.
Penalty fees reached $23.9 billion in 2009, but fell 6 percent in 2010
($22.5 billion), 14 percent in 2011 ($19.4 billion) and now 8 percent in
While this is good news for consumers, issuers have found other ways to
generate revenue that has been lost on penalty fees. According to the Hammer
report, this includes fees for replacement cards, paper statements, inactive
accounts, and customer service calls after the customer makes a certain number of
such calls in one billing cycle.
Additional fees may be on the way in the future.
"We know of no card issuer not presently weighing its fee pricing options,
or implementing higher/new fees, where permissible," said the company's chief
executive, Bob Hammer, in a statement. "By how much and how soon, of course,
varies widely by issuer and their respective strategy."
Bill Hardekopf is CEO of LowCards.com, a site that simplifies the
confusion of shopping for credit cards. It is a free, independent website that
helps consumers easily compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest introductory rates.
It also gives an unbiased ranking and review for each card.