Tuesday, January 05, 2010
Credit card issuers are producing new fees and deals to make up for the $50 billion in revenue they expect to lose as a result of the Credit Card Act of 2009. Some store-based cards, like those offered by sporting-goods chain Gander Mountain, will now come with a $1 “processing fee” for each printed statement delivered to card holders. The Gander Mountain card is issued by World Financial Network National Bank, whose parent company, Alliance Data Systems Corp. of Dallas, also issues credit cards for women’s clothing chain Ann Taylor Stores and lingerie maker Victoria’s Secret.
Some financial institutions are planning to replace lost credit card fees with new fee-based bank accounts for consumers. BBVA Compass, a regional bank with 748 branches, is offering a checking account, “Build to Order,” that allows customers to customize their accounts from a menu of options. But only the first two selections are free—after that, customers pay $2 a month for each additional feature they choose.
Other “revenue-enhancers” being used by credit card companies are: reducing the value of rewards programs; introducing new fees for inactive accounts; and encouraging clients to switch from paper checks to debit cards, which are more profitable for issuers.
-Noel Brinkerhoff
Banks Roll Out New Check, Card Fees (by Robin Sidel, Wall Street Journal)
$50 Billion in New Credit Card Fees? Lenders React to CARD Act (by Peter Cohan, Daily Finance)
Credit Card Companies Lure Customers to Bad Deals Before New Law Bans Them (by Noel Brinkerhoff, AllGov)
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