Card fees, not interest, dominate revenue
March 11, 2014

Credit card fees, and not interest, made up the majority of credit card issuers' revenue in 2013, consulting firm R.K. Hammer estimates.

R.K. Hammer first noted the trend in 2011, when prime and super prime card fees made up an estimated 52 percent of industry revenues. That figure increased to 55 percent in 2012, and was again at 55 percent last year. Prime and super prime cards are issued to consumers with the best credit ratings.

"The pause is temporary, I believe, and will rise again when issuers get to pricing other fees for services not presently charged for," says CEO Robert Hammer, although, he says, the increase won't be by much.

Other causes for the decline in interest income include lower outstanding card loans in the past four years, which have reduced interest earned; legislation limiting how rates may be changed; and cautious consumers, R.K. Hammer wrote.

Hammer gathers his figures throughout the sample year from a composite of client discussions, publicly released figures and observations. He notes that the fee income/interest income split varies widely by issuer and his figures are averages.



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