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.

Instant Insights /

Fees Now Provide More Card Income Than Interest: Analyst

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