A card industry analyst predicts that by next year, card issuers overall may derive more of their credit card income from fees on the cards than from interest on the card loans.
Robert Hammer, founder and CEO of R.K. Hammer, a card consultancy based in Thousand Oaks, Calif., pointed to industry data which showed card issuers already make almost as much from the fees their credit cards carry as from their interest.
“It has never happened in my 30 years in this business,” [that income from fees has made up more of the credit card revenue stream than interest income] Hammer wrote in an email exchange about the trend. “Downward pressure on [interest] from recent legislation and consumers turning more cautious - more thrift mentality - has prompted that. In the next year, fees in card issuing will rise higher than interest in terms of revenue streams. Pretty amazing stuff, we'd say."
He noted that credit union card issuers, to perhaps a lesser degree, were also part of the trend and that fees on credit union issued cards were also edging up.
“We have noted that fees are indeed rising [on credit union-issued cards], despite the press to the contrary; as no one is immune to the laws of gravity or economics,” he added.