Credit union marketers may soon have a widening fee gap to exploit between their credit cards and those issued by banks.
Robert Hammer, card industry analyst and founder of the Card Knowledge Factory, predicted that the overall package of card fees that bank card issuers use will start to rise again after having dropped steadily for the overall industry from $23.9 billion in 2009 to $17.8 billion in 2012.
“Year-over-year growth of penalty fees hit a wall three years ago,” Hammer said, However, [w]e 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, varies widely by issuer and their respective strategy,” he said.
“Some who opt not to raise fees are looking to cement card member relationships and raise cardholder satisfaction.”
Hammer pointed out that back in 2009, when the recession was in full force, he predicted card issuers would consider applying fees to new areas. Of those 10 predicted, Hammer reported now, banks began using new fees in six of them, including customer service call fees; raising the cash advance fee to as high as 5%; inactive account fees; delinquent payment “default pricing”; second card or replacement plastic fees; and fees for receiving paper statements
He also acknowledged that credit unions and other issuers which focus on cards more as ways to strengthen member relationships might not raise fees, but he noted they do so at the risk of losing some profitability.
“Importantly, those issuers who choose not to enhance their fee based pricing may perceive better card member loyalty and satisfaction ratings, but they do so at the risk of lower profitability than would otherwise be possible,” Hammer said.
“For those who choose to offer the product line as a member benefit and not a pure profit center,” he said, “the decision not to fully price the product may help achieve that corporate objective. It is a two-edged sword, a thin tightrope one walks when deciding whether to raise fees on card members or not.”