For the first time ever, non-credit union credit card issuers of prime and super prime credit cards in 2011 and 2012 have made more money from operational fees on their card programs than they have from interest on credit card loans, according to a leading card industry analyst.
R.K. Hammer, founder of the Card Knowledge Factory, a California-based card consultancy, said fee income as a percentage of total income from card portfolios with the highest credit scores had been rising for some time.
“The R.K. Hammer card revenue model estimates that 55% of the card industry's total revenue last year came from fees, with 45% from interest; never has the card fees trend line intersected the revenue line from interest – except for 2011 and 2012,” the firm noted.
“A combination of declining outstanding card loans these past four years which in turn reduced interest earned, plus legislation on how rates may not be changed and cautious consumers caused the amount of interest income to decline. Interest was falling, while fees were rising, a growing trend written about often in the past.
“As expected, issuer attention in 2012 had in response been directed to fees, of all types, including … fees on services that had no fees earlier. In the year earlier period, 2011, card fees earned 52% in our model, while interest came in at 48% of total revenue that year,” the firm concluded.
Credit union card programs have generally carried significantly lower fees than non-credit union card programs, but marketing experts point out that credit unions have often failed to market their cards on that fee difference.
Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.
Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
- Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
Already have an account? Sign In Now
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
