Income from fees credit card issuers charged for late payments and going over credit limits in 2014 hit their lowest levels since 2009, according to card consultancy R.K. Hammer.
Penalty fees, which included late fees, over limit fees, fees for insufficient funds and currency conversion hit a high of $22.9 billion industry wide in 2009 before falling to $22.5 billion in 2010 and every year since until hitting $11.7 billion in 2014, the Thousand Oaks, Calif.-based firm said.
Robert Hammer, R. K. Hammer company founder and CEO, attributed the drop to increased regulations and said the search for fee income continues at most card issuers.
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"Year-over-year growth of penalty fees hit a wall that remains starting five years ago, largely due to aggressive new regulations," Hammer said. "However, as the card industry necessarily continues to look for ways to boost fee income, new fees where none existed before will be implemented."
"We know of no card issuer not presently weighing its fee pricing options or implementing higher/new fees, where permissible; by how much and how soon, of course, vary widely by issuer and their respective strategy. Some who opt not to raise fees are looking to cement card member relationships and raise card member satisfaction levels," he noted.
Hammer said the chances that the CFPB has finished regulating the credit card industry is "vanishingly small" as the agency continues to examine the industry.
"Much of what we see lately is a review of marketing tactics, and whether [financial institutions] actually deliver what was promised in the pitch, and how it was promised to be delivered," Hammered wrote in a release about the low numbers.
He added, "Every card issuer would therefore be very wise to do their own similar internal compliance due diligence review, asking the key question, 'With every product or service we supply to a card member is what we deliver exactly what we promised, and how we promised providing it?'"
Hammer said if issuers do not ask that question, they risk incurring the oversight intrusion that could have been easily avoided.
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